As filed with the Securities and Exchange
Commission on June 5, 2017
File No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
NioCorp Developments Ltd
.
(Exact name of registrant as specified in its
charter)
British Columbia, Canada
(State or other jurisdiction of
incorporation or organization
)
|
1000
(Primary Standard Industrial
Classification Code Number)
|
98-1262185
(I.R.S. Employer
Identification Number)
|
7000 South Yosemite Street
Suite 115
Centennial, Colorado 80112
(720) 639-4647
(Address, including zip code, and telephone
number, including area code, of registrant’s principal executive offices)
CT Corporation System
111 Eighth Avenue
13
th
Floor
New York, New York 10011
(800) 624-0909
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
Christopher M. Kelly, Esq.
Jones Day
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
(216) 586-3939
Approximate date of commencement of proposed
sale to the public:
From time to time after this registration statement becomes effective.
If any of the securities being registered
on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check
the following box:
x
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering.
¨
If this Form is a post-effective amendment
filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.
¨
If this Form is a post-effective amendment
filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.
¨
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
¨
|
Accelerated filer
¨
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Non-Accelerated filer
x
|
Smaller Reporting Company
¨
|
|
|
|
|
|
|
(Do not check if a smaller reporting company)
|
Emerging Growth Company
x
|
If an emerging growth company, indicate by
check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards pursuant to Section 7(a)(2)(B) of the Securities Act.
x
Calculation
of Registration Fee*
Title of Each Class of Securities to be
Registered
|
|
Amount to be
Registered (1)
|
|
|
Proposed
Maximum
Offering Price
per Unit
|
|
|
Proposed
Maximum
Aggregate
Offering Price
|
|
|
Amount of
Registration Fee
|
|
Common Shares issued in connection with the Private Placement (as defined herein) to be offered for resale by the selling shareholders
|
|
|
3,538,550
|
|
|
$
|
0.518
|
(2)
|
|
$
|
1,832,968.90
|
(2)
|
|
$
|
212.44
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(2)
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Common Share purchase warrants exercisable at C$0.85 per share issued in connection with the Private Placement to be offered for resale by the selling shareholders
|
|
|
3,538,550
|
|
|
|
―
|
(3)
|
|
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―
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(3)
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|
|
―
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(3)
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Common Shares issuable upon exercise of Common Share purchase warrants exercisable at C$0.85 per share to be offered for resale by the selling shareholders
|
|
|
3,538,550
|
|
|
$
|
0.630
|
(4)
|
|
$
|
2,229,286.50
|
(4)
|
|
$
|
258.37
|
(4)
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Common Share purchase warrants exercisable at C$0.65 per share issued in connection with the Private Placement to be offered for resale by the selling shareholders
|
|
|
230,005
|
|
|
|
―
|
(3)
|
|
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―
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(3)
|
|
|
―
|
(3)
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Common Shares issuable upon exercise of Common Share purchase warrants exercisable at C$0.65 per share to be offered for resale by the selling shareholders
|
|
|
230,005
|
|
|
$
|
0.482
|
(5)
|
|
$
|
110,862.41
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(5)
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$
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12.85
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(5)
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Total
|
|
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11,075,660
|
|
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$
|
―
|
|
|
$
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4,173,117.81
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$
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483.66
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(6)
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(1)
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Pursuant to Rule 416 under the Securities Act of 1933 (the
“Securities Act”), the common shares being registered hereunder include such indeterminate number of shares as may
be issuable as a result of stock splits, stock dividends or similar transactions.
|
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(2)
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Estimated solely for the purpose of calculating the amount
of registration fee pursuant to Rule 457(c) under the Securities Act. The proposed maximum offering price per share and proposed
maximum aggregate offering price are based upon the average of the high and low prices of the common shares as of June 2,
2017 as quoted on the OTCQX of $0.518.
|
|
(3)
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Pursuant to Rule 457(g) of the Securities Act, no separate
fee is recorded for the warrants and the entire fee is allocated to the underlying common stock.
|
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(4)
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Estimated solely
for purpose of calculating the amount of registration fee pursuant to Rule 457(g) based on the highest exercise price of the warrants
of C$0.85 per common share converted into United States dollars based on the daily exchange rate of one United States dollar to
Canadian dollars as reported by the Bank of Canada on June 2, 2017 of $1.00 to C$1.3504.
|
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(5)
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Estimated solely for purpose of calculating the amount of registration fee pursuant to Rule
457(g) based on the highest exercise price of the warrants of C$0.65 per common share converted into United States dollars
based on the daily exchange rate of one United States dollar to Canadian dollars as reported by the Bank of Canada on June
2, 2017 of $1.00 to C$1.3504.
|
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(6)
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The filing fee of $483.66 is being paid concurrently with
the filing of this registration statement on Form S-1.
|
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*
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All dollar amounts reflected herein refer to U.S. Dollars
unless otherwise noted.
|
The Registrant hereby
amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the
Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The
information contained in this prospectus is not complete and may be changed. The selling shareholders may not sell these securities
until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and the selling shareholders are not soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
Subject To Completion, Dated
June 5
, 2017
PROSPECTUS
NioCorp Developments Ltd.
7,307,105 Common
Shares
3,768,555 Warrants
to Purchase Common Shares
This prospectus
relates to the registration and resale or other disposition from time to time by certain selling shareholders (each a
“selling shareholder” and collectively, the “selling shareholders”), of up to an aggregate
of 7,307,105 common shares (the “Common Shares”) of NioCorp Developments Ltd. (the “Company”,
“we”, “us” or “our”) and up to an aggregate of 3,768,555 warrants to purchase Common
Shares. The securities registered for sale are as follows:
|
·
|
3,538,550 Common Shares issued to selling shareholders in connection with
the Private Placement (as defined herein);
|
|
·
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3,538,550 warrants to purchase one Common Share exercisable at a price per Common
Share of C$0.85 (the “Selling Shareholder Warrants”) issued to selling shareholders in connection with the
Private Placement;
|
|
·
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3,538,550
Common Shares issuable upon exercise of the Selling Shareholder Warrants;
|
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·
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230,005 warrants to purchase one Common Share exercisable at a price per Common Share
of C$0.65
(the “Compensation Warrants” and, collectively with the Selling Shareholder Warrants, the
“Warrants”) issued to certain selling shareholders for services rendered to us in connection with the Private
Placement; and
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·
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230,005 Common Shares issuable upon exercise of the Compensation Warrants.
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We will issue an
aggregate of 3,538,550 Common Shares and 3,768,555 Warrants covered by this prospectus in the Private Placement. We may issue
up to an additional 3,768,555 Common Shares in conjunction with the exercise of the outstanding Warrants to be issued as part
of the Private Placement. Additional information about the Private Placement is provided in the section entitled
“Description of Private Placement” of this prospectus.
The selling shareholders
may sell or otherwise dispose of the Common Shares and Warrants covered by this prospectus or interests therein on any stock exchange,
market or trading facility on which the securities are traded or in private transactions. These dispositions may be at fixed prices,
at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined
at the time of sale, or at negotiated prices. Additional information about the selling shareholders, and the times and manner in
which they may offer and sell Common Shares and Warrants under this prospectus, is provided in the sections entitled “Selling
Shareholders” and “Plan of Distribution” of this prospectus.
We will not receive any
proceeds from the resale of the Common Shares or the Warrants by the selling shareholders. However, upon exercise we will receive
the cash exercise price of the Warrants.
Our Common Shares
are traded on the Toronto Stock Exchange (the “TSX”) under the symbol “NB” and quoted on the OTCQX
under the symbol “NIOBF”. On June 2, 2017, the last reported closing bid price of our Common Shares was $0.54
per
Common Share on the OTCQX and C$0.67 per Common Share on the TSX. The over-the-counter quotations on the OTCQX reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
You are urged to obtain current market quotations of the Common Shares. Our Warrants have not been and will not be quoted on
the TSX.
All dollar amounts reflected
herein refer to U.S. Dollars unless otherwise noted.
We are an “emerging
growth company” as defined under federal securities laws and, as such, may elect to comply with certain reduced public company
requirements for future filings.
Investing in the
Common Shares or Warrants involves a high degree of risk. See “Risk Factors” beginning on page 12 of this
prospectus.
Neither the Securities
and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of the securities
offered hereby or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is ,
2017
Table
of Contents
Glossary
of Terms
0896800
|
0896800 B.C. Ltd., a wholly-owned subsidiary of the Company and 100% owner of ECRC.
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BCSC
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British Columbia Securities Commission
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CAPEX
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Capital expenditures
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CIM
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Canadian Institute of Mining and Metallurgy
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CMC
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CMC Cometals, a division of Commercial Metals Company of Fort Lee, New Jersey
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CMC Agreement
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The Offtake Agreement dated June 2016 by and between the Company and CMC
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Common Shares
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The Common Shares without par value in the capital stock of NioCorp as the same are constituted on the date hereof, as traded on the TSX
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cut-off grade
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The lowest grade of mineralized material that qualifies as ore in a given deposit, that is, material of the lowest assay value that is included in a resource/reserve estimate
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deposit
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A mineralized body which has been physically delineated by sufficient drilling, trenching, and/or underground work, and found to contain a sufficient average grade of metal or metals to warrant further exploration and/or development expenditures. Such a deposit does not qualify as a commercially mineable ore body or as containing reserves or ore, unless final legal, technical and economic factors are resolved
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Diamond Drilling
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A type of rotary drilling in which diamond bits are used as the rock-cutting tool to produce a recoverable drill core sample of rock for observation and analysis
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ECRC
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Elk Creek Resources Corp., a private Nebraska corporation and wholly-owned subsidiary of 0896800
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Elk Creek Project
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NioCorp’s niobium, scandium and titanium project located on the Elk Creek Property
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Elk Creek Property
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NioCorp’s Carbonatite property located in Southeast Nebraska, USA
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Ferroniobium
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An iron-niobium alloy, with a niobium content of 60-70%
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Feasibility Study
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A comprehensive study of a mineral deposit in which all geological, engineering, legal, operating, economic, social, environmental and other relevant factors are considered in sufficient detail that it could reasonably serve as the basis for a final decision by a financial institution to finance the development of the deposit for mineral production
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First Tranche Increase
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NioCorp’s right to call an additional $1.0 million under the Lind Agreement
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First Tranche Increase Warrants
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Warrants issued to Lind upon funding of the First Tranche Increase
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grade
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A particular quantity of ore or mineral, relative to other constituents, in a specified quantity of rock
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host
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A rock or mineral that is older than rocks or minerals introduced into it or formed within it
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HSLA steel
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High strength low alloy steel
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Initial Convertible Security
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The first issuance under the Lind Agreement with a face value of $5.4 million
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Lind
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Lind Asset Management IV, an entity managed by The Lind Partners, a New York based asset management firm
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Lind Agreement
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NioCorp’s definitive convertible security funding agreement with Lind dated December 14, 2015
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Mark Smith
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Chief Executive Officer, President, and Executive Chairman of NioCorp
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MRCC
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Mackie Research Capital Corporation
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Mineral Reserve
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The economically and legally mineable part of a measured or indicated mineral resource demonstrated by at least a preliminary feasibility study under NI 43-101 standards or a bankable feasibility study under SEC Industry Guide 7 Standards. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A mineral reserve includes diluting materials and allowances for losses that may occur when the material is mined and processed.
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Mineral Resource
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A concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge. The term “mineral resource” covers mineralization and natural material of intrinsic economic interest which has been identified and estimated through exploration and sampling and within which mineral reserves may subsequently be defined by the consideration and application of technical, economic, legal, environmental, socio-economic and governmental factors. The phrase “reasonable prospects for economic extraction” implies a judgment by a qualified person (as that term is defined in NI 43-101) in respect of the technical and economic factors likely to influence the prospect of economic extraction. A mineral resource is an inventory of mineralization that, under realistically assumed and justifiable technical and economic conditions, might become economically extractable.
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Inferred Mineral Resource:
Under CIM standards, an Inferred Mineral Resource is that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.
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Indicated Mineral Resource:
Under CIM standards, an Indicated Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.
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Measured Mineral Resource:
Under CIM standards, a Measured Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.
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SEC Industry Guide 7 does not define “mineral resources” and typically mineral resources may not be disclosed in reports filed with the SEC. See “Cautionary Note to U.S. Investors Regarding Estimates of Mineral Reserves and Mineral Resources” below.
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National Instrument 43-101/ NI 43-101
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National Instrument 43-101 of the Canadian Securities Administrators entitled “Standards of Disclosure for Mineral Projects”
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Nb or niobium
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The alloying agent niobium, primarily used in the production of high strength, low alloy HSLA steel
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NioCorp, we, us, our or the Company
|
NioCorp Developments Ltd.
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October 2015 PEA
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NioCorp’s Amended Preliminary Economic Assessment dated October 16, 2015
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Offtake Agreement
|
An offtake agreement is an agreement between NioCorp and a third party for the purchase and sale of products to be produced from the Elk Creek Project, at market based prices, that will commence upon the Elk Creek Project reaching commercial production
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OPEX
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Operating expenditures
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Original Smith Loan
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A loan in the amount of $1.5 million with Mark Smith, dated June 17, 2015.
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PEA
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A Preliminary Economic Assessment, as defined by National Instrument 43-101
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Sc or scandium
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The element scandium, which is used for aerospace industry components as well as applications that call for high strength, low weight metals
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SEC
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United States Securities and Exchange Commission
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Securities Act
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United States Securities Act of 1933, as amended
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SGS
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SGS Canada Inc.
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Smith Credit Agreement
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A non-revolving credit facility agreement in the amount of $2.0 million with Mark Smith, dated January 16, 2017.
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SGS facility
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A metallurgical testing facility located in Lakefield, Ontario owned and operated by SGS
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SRK
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SRK Consulting (US) Inc.
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Ti or titanium
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The element titanium, which in its oxide form is a common pigment in paper, paint and plastic. In its metallic form, Titanium is used in aerospace applications, armor, chemical processing applications, marine hardware applications, medical implants, power generation and in sporting goods
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TK
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ThyssenKrupp Metallurgical Products GmbH
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TK Agreement
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The Offtake Agreement dated November 10, 2014 by and between the Company and TK
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TSX
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The Toronto Stock Exchange
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Unit
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An equity package consisting of one common share of the Company and one transferable common share purchase warrant, with an expiration date of three years from issuance
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USACE
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The United States Corps of Engineers
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USGS
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The United States Geological Service
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VWAP
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The volume-weighted average price of the Company’s Common Shares on the TSX
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SEC INDUSTRY GUIDE 7 DEFINITIONS
exploration stage
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A mineral prospect which is not in either the development or production stage.
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development stage
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A mineral project which is undergoing preparation of an established commercially mineable deposit for its extraction but which is not yet in production. This stage occurs after completion of a Feasibility Study.
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mineralized material
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Material that is not included in the reserve as it does not meet all of the criteria for adequate demonstration for economic or legal extraction.
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probable reserve
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Reserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.
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production stage
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A project which is actively engaged in the process of extraction and beneficiation of mineral reserves to produce a marketable metal or mineral product.
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proven reserve
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Reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established.
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reserve
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That part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. Reserves must be supported by a feasibility study done to bankable standards that demonstrates the economic extraction. “Bankable standards” implies that the confidence attached to the costs and achievements developed in the study is sufficient for the project to be eligible for external debt financing. A reserve includes adjustments to the in-situ tonnes and grade to include diluting materials and allowances for losses that might occur when the material is mined.
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Metric Equivalents
For ease of reference,
the following factors for converting Imperial measurements into metric equivalents are provided:
To convert from Imperial
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To metric
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Multiply by
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Acres
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Hectares
|
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0.404686
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Feet
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Metres
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0.30480
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Miles
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Kilometres
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1.609344
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Tons
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Tonnes
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0.907185
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Ounces (troy)/ton
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Grams/Tonne
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34.2857
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1 mile = 1.609 kilometers
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2000 pounds (1 short ton) = 0.907 tonnes
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1 acre = 0.405 hectares
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1 ounce (troy) = 31.103 grams
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2,204.62 pounds = 1 metric tonne = 1 tonne
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1 ounce (troy)/ton = 34.2857 grams/tonne
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Cautionary
Note to U.S. Investors
Regarding Mineral Reserve and Resource Estimates
The mineral estimates
in this prospectus have been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ
from the requirements of United States securities laws. The terms “mineral reserve”, “proven mineral reserve”
and “probable mineral reserve” are Canadian mining terms as defined in accordance with Canadian National Instrument
43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) and the CIM Definition Standards on Mineral
Resources and Mineral Reserves, adopted by the CIM Council, as amended. These definitions differ from the definitions in the SEC
Industry Guide 7 under the Securities Act. Under SEC Industry Guide 7 standards, a “final” or “bankable”
feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis
to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.
In addition, the terms
“mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred
mineral resource” are defined in, and required to be disclosed by NI 43-101; however, these terms are not defined terms under
SEC Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC. Investors
are cautioned not to assume that all or any part of a mineral deposit in these categories will ever be converted into reserves.
“Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to
their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded
to a higher category. Under Canadian securities laws and regulations, estimates of inferred mineral resources may not form the
basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part
of an inferred mineral resource exists or is economically or legally mineable. Certain disclosures of the results of mining operations
contained herein are permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report
mineralization that does not constitute “reserves” by SEC Industry Guide 7 standards as in place tonnage and grade
without reference to unit measures.
Accordingly, information
contained in this prospectus and the documents incorporated by reference herein contain descriptions of our mineral deposits that
may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements
under the United States federal securities laws and the rules and regulations thereunder.
Currency
and Exchange Rates
All dollar amounts in
this prospectus are expressed in United States dollars unless otherwise indicated. The Company’s accounts are maintained
in United States dollars and the Company’s financial statements are prepared in accordance with United States Generally Accepted
Accounting Principles. Some of the Company’s material agreements use Canadian dollars and the Company’s Common Shares
as traded on the Toronto Stock Exchange are traded in Canadian dollars. As used herein “C$” represents Canadian dollars.
The following table sets
forth the rate of exchange for the Canadian dollar, expressed in United States dollars in effect at the end of the periods indicated,
the average of exchange rates in effect during such periods, and the high and low exchange rates during such periods based on the
noon rate of exchange as reported by the Bank of Canada for conversion of Canadian dollars into United States dollars.
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Nine Months
Ended March 31,
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|
Fiscal Year Ended June 30
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2017($)
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2016($)
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2015($)
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2014($)
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Canadian Dollars to U.S. Dollars
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Rate at end of period
|
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0.7506
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0.7687
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0.8017
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0.9367
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|
Average rate for period
|
|
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0.7572
|
|
|
|
0.7541
|
|
|
|
0.8520
|
|
|
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0.9342
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High for period
|
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|
0.7828
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|
|
|
0.7972
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|
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0.9404
|
|
|
|
0.9768
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Low for period
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|
0.7363
|
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0.6854
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0.8888
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About
This Prospectus
This prospectus is part
of a registration statement that we filed with the SEC.
You should rely only on
the information contained in this prospectus. We have not authorized anyone to provide you with information different from that
contained in this prospectus. This prospectus is offering to sell, and is seeking offers to buy, the securities only in jurisdictions
where offers and sales are permitted. The information contained in this prospectus speaks only as of the date of this prospectus
unless the information specifically indicates that another date applies, regardless of the time of delivery of this prospectus
or of any sale of our Common Shares or Warrants.
We may provide a prospectus
supplement containing specific information about the terms of a particular offering by the selling shareholders, or their transferees.
The prospectus supplement may add, update or change information in this prospectus. If information in a prospectus supplement is
inconsistent with the information in this prospectus, you should rely on the information in that prospectus supplement. You should
read both this prospectus and, if applicable, any prospectus supplement hereto. See “Where You Can Find More Information”
for more information.
This prospectus includes
industry and market data and other information that we have obtained from, or which is based upon, market research, independent
industry publications or other publicly available information. Any such data and other information is subject to change based on
various factors, including those described below under the heading “Risk Factors” and elsewhere in this prospectus.
Our logo and some of
our trademarks are used in this prospectus, which remain our sole intellectual property. This prospectus also includes trademarks,
tradenames, and service marks that are the property of other organizations. Solely for convenience, our trademarks and tradenames
referred to in this prospectus appear without the TM symbol, but those references are not intended to indicate, in any way, that
we will not assert, to the fullest extent under applicable law, our rights, or the right of the applicable licensor to these trademarks
and tradenames.
We have not, and the
selling shareholders have not, authorized anyone to provide you with information different from that contained or incorporated
by reference in this prospectus or in any supplement to this prospectus or free writing prospectus, and neither we nor the selling
shareholders takes any responsibility for any other information that others may give you. This prospectus is not an offer to sell,
nor is it a solicitation of an offer to buy, the securities in any jurisdiction where the offer or sale is not permitted. You should
not assume that the information contained in this prospectus or any prospectus supplement or free writing prospectus is accurate
as of any date other than the date on the front cover of those documents, or that the information contained in any document incorporated
by reference is accurate as of any date other than the date of the document incorporated by reference, regardless of the time of
delivery of this prospectus or any sale of a security. Our business, financial condition, results of operations and prospects may
have changed since those dates.
Prospectus
Summary
This summary highlights information contained
elsewhere in this prospectus. It may not contain all of the information that you should consider before investing in our Common
Shares. You should read this entire prospectus carefully, including the “Risk Factors” and the financial statements
and related notes included herein. This prospectus includes forward-looking statements that involve risks and uncertainties. See
“Cautionary Note Regarding Forward-Looking Statements.” References to “we,” “our,” “NioCorp,”
and the “Company” refer to NioCorp Developments Ltd.
About the Company
NioCorp is developing
a superalloy materials project that, if and when developed, will produce niobium, scandium, and titanium products. Known as the
“Elk Creek Project,” it is located near Elk Creek, Nebraska, in the southeast portion of the state.
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Niobium is used to produce various superalloys that are extensively used in high performance aircraft
and jet turbines. It also is used in HSLA steel, a stronger steel used in automotive, bridges, structural systems, buildings, pipelines,
and other applications that generally enables those applications to be stronger and lighter in mass. This “lightweighting”
benefit often results in environmental benefits, including reduced fuel consumption and material usage, which can result in fewer
air emissions.
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Scandium can be combined with aluminum to make super-high-performance alloys with increased strength
and improved corrosion resistance. Scandium also is a critical component of advanced solid oxide fuel cells, an environmentally
preferred technology for high-reliability, distributed electricity generation.
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Titanium is a component of various superalloys and other applications that are used for aerospace
applications, weapons systems, protective armor, medical implants and many others. It also is used in pigments for paper, paint,
and plastics.
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Our primary business strategy
is to advance our Elk Creek Project to commercial production. We are focused on obtaining additional funds to carry out our near-term
planned work programs to complete a feasibility study for the Elk Creek Project and to begin development. Subject to delivering
a positive feasibility study for the Elk Creek Project, we intend to secure the project financing necessary to complete mine development
and construction of the Elk Creek Project.
NioCorp is a mineral exploration
company engaged in the acquisition, exploration and development of mineral properties. We are in the exploration stage as our properties
have not yet reached commercial production, and none of our properties is beyond the exploration stage at this time. All work presently
planned by us is directed at defining mineralization and increasing understanding of the characteristics of, and economics of,
that mineralization. In addition, we have also conducted permitting, land reclamation and other related activities at and for the
Elk Creek Project.
NioCorp was incorporated
under the laws of the Province of British Columbia under the BCBCA on February 27, 1987 under the name “IPC International
Prospector Corp.”. On May 22, 1991, we changed our name to “Kingston Resources Ltd”; on June 29, 2001, we changed
our name to “Butler Developments Corp”; on February 12, 2009, we changed our name to “Butler Resource Corp”;
on March 4, 2010, we changed our name to “Quantum Rare Earth Developments Corp”; and on March 4, 2013, we changed our
name to “NioCorp Developments Ltd”.
NioCorp is a reporting
issuer in British Columbia, Alberta, Saskatchewan, Ontario and New Brunswick. Our registered and records office is located at
595 Burrard Street, Suite 2600, Vancouver, British Columbia V7X 1L3 (ATTN: Blake, Cassels & Graydon LLP). Our head office
is located at 7000 South Yosemite Street, Suite 115, Centennial, Colorado 80112.
Recent Corporate Developments
On May 16, 2017,
we entered into an underwriting agreement (the “Underwriting Agreement”), subject to regulatory approval,
with Mackie Research Capital Corporation (“Mackie”), pursuant to which Mackie has agreed to purchase, on a bought
deal short form prospectus basis, 3,077,000 units of the Company (the “Units”) at a price of C$0.65 per Unit
(the “Private Placement”), subject to an option to increase the size of the Private Placement by up to 15% in
Units (the “Overallotment Option”). Each Unit will consist of one Common Share and one transferable Common
Share purchase warrant (collectively, the “Selling Shareholder Warrants”), with each Selling Shareholder
Warrant entitling the holder to acquire one Common Share at a price of C$0.85 at any time prior to the date which is 36
months following the closing date of the Private Placement (the “Closing Date”). This prospectus assumes
that Mackie will exercise the Overallotment Option in full on the Closing Date. As a result, we expect to issue an aggregate
of 3,538,550 Units on the Closing Date in connection with the Private Placement. In connection with the closing of the
Private Placement and assuming the full exercise of the Overallotment Option on the Closing Date, Mackie will also receive
230,005 non-transferable Common Share purchase warrants (collectively, the “Compensation Warrants”), with each
Compensation Warrant entitling the holder to acquire one Common Share at a price of C$0.65 at any time prior to the date
which is 36 months from the Closing Date. Pursuant to the Underwriting Agreement, the settlement of the Private Placement,
and our receipt of the net proceeds therefrom, will not occur until the registration statement to which this prospectus
relates is declared effective by the SEC. Additional information about the Private Placement is provided in the section
entitled “Description of Private Placement” of this prospectus.
On April 21, 2017, our
resale registration statement on Form S-1 (“April 2017 S-1”) filed on April 12, 2017, was declared effective by the
SEC. The April 2017 S-1 permits selling securityholders of units of the Company issued in our February 2017 Offering (as defined
below) who registered the resale of Common Shares underlying such units in the April 2017 S-1 and Lind, with respect to Common
Shares issuable upon exercise of the 890,670 Lind First Tranche Increase Warrants and upon conversion of $1.2 million of principal
amount of convertible notes held by it, to avoid potentially indefinite hold periods on such Common Shares under U.S. federal securities
laws. NioCorp will not receive any proceeds from the sale of the Common Shares registered pursuant to the April 2017 S-1 and will
only receive the exercise price of the applicable securities upon exercise of such securities.
On March 31, 2017, we
received $1.0 million in First Tranche Increase funding from Lind. In connection with this additional funding, the Company issued
890,670 Lind First Tranche Increase Warrants, at an exercise price of C$0.90 per warrant.
On March 24, 2017, we
announced that we had entered into an amending agreement dated March 20, 2017, with Lind to extend the term of the Initial Convertible
Security by six months to June 17, 2018, and entered into amending agreements dated March 20, 2017, with Mark Smith to extend the
due dates of the Smith Credit Agreement and Original Smith Loan to June 16, 2018 and June 17, 2018, respectively.
On February 28, 2017,
we completed the second and final tranche closing (the “Final Closing”) of our non-brokered private placement of units
announced January 27, 2017, January 30, 2017, and February 10, 2017 (the “February 2017 Offering”). The Final Closing
consisted of the issuance of 3,503,989 units consisting of 2,964,682 units dated February 21, 2017 (each a “February
21, 2017 Unit”) and 539,307 units dated February 28, 2017 (each a “February 28, 2017 Unit”) at a price of
C$0.70 per each February 21, 2017 and February 28, 2017 Unit, for gross aggregate proceeds of C$2.5 million. Each February 21,
2017 Unit consists of one Common Share and one transferable Common Share purchase warrant (each whole such warrant a “February
21, 2017 Warrant”), with each February 21, 2017 Warrant entitling the holder thereof to acquire one additional Common Share
at a price of C$0.85 until February 21, 2020. Each February 28, 2017 Unit consists of one Common Share and one transferable Common
Share purchase warrant (each whole such warrant a “February 28, 2017 Warrant”), with each February 28, 2017 Warrant
entitling the holder thereof to acquire one additional Common Share at a price of C$0.85 until February 28, 2020. The Company
paid cash commissions of C$87,527 and issued 78,342 broker warrants (having the same terms as the Warrants) in connection with
the Private Placement to brokers outside of the United States.
On February 21, 2017,
we announced that, further to our existing Lind Agreement, the Company had provided Lind with its First Tranche Increase demand,
pursuant to which the Company called an additional $1.0 million in funds from Lind under the Lind Agreement. NioCorp was entitled
to demand the First Tranche Increase pursuant to the terms of the Lind Agreement. The First Tranche Increase funds are required
to be delivered by Lind to the Company within 30 trading days, will have a term of two years and bear prepaid interest at a rate
of 10% per annum. In connection with the First Tranche Increase, the Company is obligated to issue Lind First Tranche Increase
Warrants. The First Tranche Increase Warrants will have a term of 36 months from issuance, and the number of First Tranche Warrants
to be issued will be equal to $1.0 million divided by the VWAP for the five (5) consecutive trading days immediately before the
First Tranche Increase funding is received, multiplied by 0.5. The exercise price of the First Tranche Increase Warrants issuable
in connection with the First Tranche Increase will be equal to 120% of the Company’s five (5) trading day VWAP per share
immediately prior to the date the First Tranche Increase funding is received.
On February 14, 2017,
we completed the first tranche closing (the “First Tranche Closing”) of our February 2017 Offering. The First Tranche
Closing consisted of the issuance of 3,860,800 units (each a “February 14, 2017 Unit”) at a price of C$0.70 per Unit,
for gross proceeds of C$2.7 million. Each February 14, 2017 Unit consists of one Common Share and one transferable Common Share
purchase warrant (each whole such warrant a “February 14, 2017 Warrant”), with each February 14, 2017 Warrant
entitling the holder thereof to acquire one additional Common Share at a price of C$0.85 until February 14, 2020.
On February 10, 2017,
we announced the final increase to the maximum gross proceeds of our February 2017 Offering to C$4.75 million from the original
maximum of C$2.0 million.
On February 7, 2017, we
announced a second increase in the maximum gross proceeds of the February 2017 Offering to C$4.0 million from the original maximum
of C$2.0 million.
On January 30, 2017, the
Company announced that, further to its January 27, 2017 announcement regarding the February 2017 Offering, due to strong investor
demand it has increased the maximum gross proceeds of the February 2017 Offering from C$2.0 million to C$2.5 million.
On January 27, 2017, the
Company announced the C$2.0 million February 2017 Offering for up to 2,857,143 units at a price of C$0.70 per unit. Each unit to
consist of one Common Share and one transferable Common Share purchase warrant, with each such warrant to be exercisable to acquire
one additional Common Share of the Company for a period of 36 months at a price of C$0.85 per Common Share.
On January 16, 2017, we
entered into the Smith Credit Agreement in the amount of $2.0 million with Mark Smith. The Smith Credit Agreement bears an interest
rate of 10% and is drawdowns are subject to a 2.5% establishment fee. Amounts outstanding under the Smith Credit Agreement will
become due January 16, 2018, and are secured by all of the Company’s assets pursuant to a general security agreement between
the Company and Mr. Smith dated June 17, 2015. The Smith Credit Agreement contains financial and non-financial covenants
customary for a facility of this size and nature. On January 18, 2017, we completed a drawdown from the Smith Credit Agreement
in the amount of $175.
On October 14, 2016, we
announced that NioCorp’s resale registration statement on Form S-1 (“S-1”) filed on September 2, 2016, as
amended September 22, 2016, was brought effective by the SEC. The S-1 permits selling securityholders of certain Common Share purchase
warrants of the Company (“Selling Securityholders”) who registered the resale of Common Shares issuable upon exercise
of such warrants in the S-1 to avoid potentially indefinite hold periods on the Common Shares under U.S. federal securities laws.
NioCorp will not receive any proceeds from the sale of the Common Shares by Selling Securityholders and will only receive the exercise
price of the warrants upon exercise of such warrants.
On July 11, 2016, we announced
the completion of our warrant exercise program for gross proceeds to us of C$4.8 million. A total of approximately 7.04 million
C$0.65 share purchase warrants expiring November 10, 2016 were exercised during this program. Each holder who exercised one warrant
during the program received 1.11029 Common Shares, representing one warrant share and 0.11029 of a Common Share, as the incentive
portion. The program had been previously approved by our shareholders on May 17, 2016.
On July 1, 2016, we appointed
Neal Shah as our Chief Financial Officer. Mr. Shah had served as our Interim Chief Financial Officer since April of 2015.
Prior to that, he was our Vice President of Finance.
On June 20, 2016, we
announced that we had entered into a joint development agreement with IBC Advanced Alloys Corp. to investigate and develop applications
for scandium-containing alloys for multiple downstream markets.
On January 19, 2016, we
announced the closing of our non-brokered private placement of equity units. We received gross proceeds of C$5,247,485 through
the issuance of 9,074,835 Units at a price of C$0.57 per Unit. Each Unit warrant entitles the holder to acquire a Common Share
at a price of C$0.75 for a period of three years from their date of issuance.
On December 23, 2015,
we announced that we had received conditional approval from the TSX for the Lind Agreement. We also announced that we received
an initial $3.0 million in first tranche funding from Lind. In addition to the $3.0 million transferred on December 23, 2015, an
additional $1.0 million was transferred on December 30, 2015, and an additional $500,000 was received as of January 19, 2016.
Lind can increase the funding under the Lind Agreement by an additional $1.0 million during its two-year term. Further, provided
certain conditions are met, we will have the right to call an additional $1.0 million under the Lind Agreement. The Lind Agreement
also provides for the issuance of a second convertible security on mutual agreement of us and Lind, in which Lind would fund up
to another $6.0 million (the “Second Tranche”), which can also be increased by $1.0 million.
On October 22, 2015, we
announced that we had closed a non-brokered private placement of unsecured convertible promissory notes for $0.8 million. The convertible
promissory notes bear interest at a rate of 8%, are payable quarterly in arrears, are non-transferable, and have a term of three
years from the date of issue. Principal under the convertible promissory notes was repayable by us in cash or Common Shares at
a conversion price of C$0.97 per Common Share, calculated on conversion or repayment using the then-current Bank of Canada noon
exchange rate. Accrued but unpaid interest on the convertible promissory notes was payable by us in cash or Common Shares at a
price per Common Share equal to the most recent closing price of our Common Shares prior to the delivery to us of a request to
convert interest, or the due date of interest, as applicable, calculated using the then-current Bank of Canada noon exchange rate.
Elk Creek Project Update
On June 1, 2017,
we announced that elements of the Feasibility Study related to engineering and materials characterization work have
recently increased beyond earlier estimates. We now estimate that the total cost of completing the Feasibility Study has
increased by approximately $0.8 million above the estimate provided in our financial statements for the quarter ended March
31, 2017. Total estimated cost of the Feasibility Study is approximately $33 million, of which approximately $32 million had
been spent as of March 31, 2017. We also announced that results from our mine backfill material testing program have
demonstrated backfill strengths that exceeded the design criteria set as part of the Elk Creek mine design. Backfill testing
is the final material testing program required prior to release of the Feasibility Study. Updates to capital expenditure and
operating expenditure estimates included in the October 2015 PEA, however, depend upon a number of factors and will not be
determined until all remaining work is complete on the Feasibility Study. In addition, we announced that we have been
notified by the USACE that additional authorization will be required under Section 14 of the Rivers and Harbors
Appropriations Act (33 USC 408) (Section 408) for the mine water outfall mechanism in the Missouri River. The 408
authorization only involves the outfall structure itself, and not the waterline’s discharged water, which is governed
by State of Nebraska permitting authorities. The 408 authorization may require a case-specific environmental analysis, such
as an Environmental Assessment (“EA”) or an Environmental Impact Statement (“EIS”), or it may be able to proceed under
categorical exclusion provisions in the USACE’s Section 408 program, which would not require completion of either an EA
or an EIS. We are working with the USACE to determine how to most efficiently proceed with this permitting process.
On April 10, 2017, we
announced that we had reached agreement with private landowners on the final land parcel needed prior to completion of a feasibility
study for our Elk Creek Project. The perpetual easement between NioCorp and the landowners is for a land parcel at the terminus
of the Company’s proposed waterline to the Missouri River from its Elk Creek property. The easement facilitates the shortest
route for the waterline between the property and the Missouri River, which helps to cut costs, reduce the Elk Creek Project’s
environmental footprint, and furthers the Company’s goal of minimizing impacts to federally regulated wetlands and stream
channels.
On March 30, 2017, we
announced the submission of a Pre-Construction Notification ("PCN") permit application to the USACE for the proposed
waterline from the Elk Creek Project to the Missouri River. The PCN filed by NioCorp with the USACE covers the outfall structure
portion of the Project’s waterline in the Missouri River. Under current federal law (40CFR330.1 (e)), NioCorp may presume
that the PCN qualifies for the USACE’s Nationwide Permit 12 (Utility Line Activities) unless it is notified by the USACE
within 45 calendar days. If the USACE notifies NioCorp that the notification is incomplete, one additional 45-day period commences
upon receipt of the revised notification. The remainder of the proposed 33-mile waterline is able to move forward under non-notifying
parameters of Nationwide Permit 12, given that it involves no permanent impacts to wetlands and stream channels and will have only
temporary impacts during construction. Additionally, the proposed underground mine, surface processing facilities, and tailings
impoundment are estimated to result in zero permanent impacts to any federally jurisdictional waters, and thus will need no discretionary
permit from the USACE. The USACE responded to the March 24, 2017 PCN notice with a series of questions on April 7, 2017. The Company
responded to the USACE and provided additional information on May 5, 2017, which started the second and final 45-day review period
for this permit. As such, the Company expects to receive authorization, on or before June 19, 2017, for construction of the mine
and surface facilities along with all of the Project’s proposed 33-mile waterline from the Project site to the Missouri River
except the mine water outfall mechanism to be located in the River. Further, the Company has been notified by the USACE that the
mine water outfall mechanism will be subject to an additional authorization under Section 14 of the Rivers and Harbors Appropriations
Act (33 USC 408) (“Section 408”). The Company is currently working with the USACE to determine the requirements for
the Section 408 process. The Company understands that the PCN process for the mine water outfall mechanism will be deemed complete
once the Section 408 authorization has been obtained.
On March 27, 2017, the
Company announced the successful production of high-purity 99.9% commercial grade Scandium Trioxide from its Elk Creek, Nebraska
resource and that it has finalized plans for the proposed Scandium purification circuit to be used at its Elk Creek Project. We
also announced that we anticipate public release of the results of the Elk Creek Feasibility Study in the second calendar quarter
of 2017. Following the release of the Feasibility Study, the Company intends to intensify current efforts to secure government
permits and obtain project financing and to prepare for the launch of construction operations in Nebraska.
On February 6, 2017,
we announced that new environmental improvements in our Elk Creek Project may allow for a permit under the USACE Nationwide Permit
program under Section 404 of the Clean Water Act, instead of the USACE’s lengthier and more costly Individual Permit process.
As a result of recent engineering and environmental design advances achieved by NioCorp and its consulting team, we believe that
the Elk Creek Project’s estimated impacts on federally regulated wetlands and stream channels have been materially reduced.
As a result, the Elk Creek Project is expected to qualify for a Nationwide Permit rather than an Individual Permit under Section
404 of the Clean Water Act. USACE officials have confirmed to NioCorp that impacts at these relatively low levels generally qualify
a project for the Nationwide Permit program, although a final determination by the USACE can be made only after a complete permit
application is submitted.
On January 24, 2017, we
announced that recent metallurgical process breakthroughs allowing the recycling of materials previously planned for disposal as
part of the Elk Creek Project should simplify and streamline the Elk Creek Project’s permitting by the USACE because of significantly
reduced environmental impacts. The Company’s October 2015 PEA called for a seven-kilometer railroad spur line, along with
supporting rail infrastructure, in order to deliver approximately 7,000 tonnes per week of reagents needed for separation and purification
of the three superalloy metals (Niobium, Scandium, and Titanium) that NioCorp plans to produce. Metallurgical process advances
announced by NioCorp (see announcement of January 18, 2017, below) will allow The Elk Creek Project to recycle many of
these reagents from material that previously was planned for disposal either in an on-site tailings storage area or as mine backfill.
They also will allow an elimination of the planned railroad spur line and supporting infrastructure. That, in turn, will dramatically
reduce The Elk Creek Project’s projected impacts to wetlands and waterways that are subject to regulation by the USACE.
On January 18, 2017, we
announced the achievement of two major process breakthroughs as part of final design work for the Feasibility Study. Both advances
– one in the Niobium metallurgical process and one related to regenerating useful materials from process streams previously
slated for disposal – may lead to lower-than-expected CAPEX and OPEX for the sub-systems involved. Subsequently, on January
24, 2017, we announced that based on these breakthroughs we will eliminate a planned railroad spur line and supporting infrastructure
from the Elk Creek Project. The original railroad spur line would have required constructing several railroad bridges over the
Nemaha River, Elk Creek, and various tributaries, as well as impacting an estimated 2.6 acres of wetlands and open water, and more
than 1,700 feet of various water channels. Final CAPEX estimates will be determined when all remaining Feasibility Study work is
complete.
On January 9, 2017, we
announced the successful conclusion of negotiations with private landowners in the Elk Creek, Nebraska area that will allow the
Company to purchase land needed for the preferred layout of the Elk Creek Project’s proposed underground mine and surface
processing facility.
On December 14, 2016,
we announced the successful conclusion of the Niobium Optimization Pilot Plant, which demonstrated high Niobium recoveries under
continuous operating conditions. This was the Company’s final pilot plant planned for the Feasibility Study. The Niobium
Optimization Pilot Plant was constructed and operated at the SGS facility. The primary objective of the Niobium Optimization Pilot
Plant was to test the level of Niobium recoveries that could be achieved in continuous operation, and these Niobium recoveries
averaged 97% over a 36-hour period of the first 48 hours of Niobium Optimization Pilot Plant operations. Additional testing of
the Niobium Precipitation process demonstrated potential operational efficiencies that may provide options for reductions in CAPEX
and/or OPEX for this portion of the flowsheet if and when NioCorp’s processing facility is built and brought into operation.
On December 6, 2016, we
announced the successful completion of the Calcination Pilot Plant, which demonstrated a means of recycling sulphuric acid under
continuous conditions. The Calcination Pilot Plant was constructed and operated at the SGS facility. The Calcination Pilot Plant
operated continuously from November 28 through December 2, 2016. Solid material generated during the Acid Regeneration Pilot
Plant was fed to a kiln where it was heated to decompose the solids into the gaseous precursors of sulphuric acid. The Calcination
Pilot Plant accomplished all three of its objectives, which were to run the calcination unit operation continuously, to generate
quantities of Calcine product for follow-on characterization testing, and to provide a characterization of the gas generated during
calcining.
On November 7, 2016,
we announced the successful conclusion of the Acid Regeneration Pilot Plant as part of the Feasibility Study. This pilot produced
hydrochloric acid under continuous conditions and was constructed and operated at the SGS facility. The Acid Regeneration Pilot
Plant operated continuously from October 17 through October 22, 2016. Sulphuric acid was used to regenerate the hydrochloric
acid used in the Company’s Pre-Leach operation, which is the key first step in the Superalloy materials recovery process.
Data from the pilot demonstrates that 99.94% of the hydrochloric acid used in the Pre-Leach operation can be regenerated.
On September 8, 2016,
we announced the successful completion of a Jurisdictional Determination (“JD”) process with the USACE for the Elk
Creek Project. The JD issued by the USACE identifies wetlands and streams within the Elk Creek Project’s footprint that are
considered Waters of the US (“WOTUS”) and are therefore regulated under the federal Clean Water Act. The Elk Creek
Project, as laid out in the October 2015 PEA, was designed to minimize impacts on WOTUS wetlands and streams. The JD reinforced
our belief that there are no WOTUS wetlands and streams in the immediate footprint of the Elk Creek Project’s product processing
facilities.
On July 13, 2016, we announced
that the first sample of scandium material has been produced from our Elk Creek, Nebraska resource. The sample was produced during
the on-going bench testing and optimization program of the Company’s scandium recovery operations at the SGS facility. The
scandium precipitate was produced through a process that is a precursor to the commercial process that will make higher-purity
commercial grade scandium trioxide at our Elk Creek, Nebraska mine and processing facility.
On June 23, 2016, we announced
the successful completion of a Whole Ore Pre-Leach Pilot Plant (“WPL”) as part of our Elk Creek superalloy materials
feasibility study. We believe the WPL paves the way for our remaining feasibility study pilot plants to commence at the SGS facility.
This pilot plant is a key component of the metallurgical development and design program that we anticipate will lead to the completion
of the Elk Creek superalloy materials feasibility study. It was designed to test the continuous operation of the WPL operation
as well as providing scandium-bearing solutions for a subsequent Scandium Solvent Extraction Pilot Plant, along with Pre-Leach
Residue for a subsequent Acid Bake / Water Leach Pilot Plant.
On June 15, 2016, we announced
that we had entered into the CMC Agreement, under which CMC expects to purchase up to a maximum of 1,875 tonnes per year, or roughly
twenty-five (25%), of our potential annual Ferroniobium production from our Elk Creek, Nebraska resource. Under the CMC Agreement,
CMC will purchase this amount of Ferroniobium under a market-based pricing structure for an initial 10-year term, with an option
to extend beyond that period upon mutual agreement of the parties.
On October 16, 2015, we
released the October 2015 PEA, which amended a previous PEA following a review by the BCSC. The October 2015 PEA provided additional
descriptions of the scandium demand and pricing assumptions included in the previous PEA, including that a significant portion
of the Elk Creek Project revenue, and achieving that revenue projected in the previous PEA, is subject to market growth in scandium,
which is a developing market with a risk of oversupply and/or undersupply disrupting pricing. The October 2015 PEA did not contain
any changes to the project economics, mineral resource, plant design or mine plan when compared to the previous PEA results.
We continued
to advance Feasibility Study and other Elk Creek Project-related work during the quarter ended March 31, 2017. This included
advancing the final confirmatory metallurgical test programs at third party labs to firm up the basis of design for the
surface production plant, as well as advancing characterization studies for the various products that the surface production
plant would produce. In parallel with this work, the Company has completed equipment sizing, layout and engineering
design sufficient to support a Feasibility Study level cost estimate for the project.
With the completion of
the work efforts noted above, we are now engaged in wrapping up the final components of the Feasibility Study and expect to publicly
release our Feasibility Study results by June 30, 2017. Remaining work elements are currently being worked to completion, and include the following
tasks:
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Materials Characterization for Tailings Impoundment Design and Mine Backfill Purposes: We are now analyzing and
quantifying the physical, geotechnical, environmental, and geochemical properties of our plant tailings and evaluating their
engineering properties for use as a backfill material in the mine. Testing required in this process involves the curing of a
range of mixtures of the tailings with cement and or backfill that can take up to 28 days. The properties determined during
these test programs will drive the capital and operating costs of the backfill system and the surface impoundment.
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Feasibility Study-Level Hydrometallurgical Engineering Design: We have now locked down hydrometallurgical process and are working
to complete the Feasibility Study level process engineering, layout, and cost estimating for the hydrometallurgical plant (where
we separate and purify Scandium, Titanium and Niobium). We have already completed this work for the pyrometallurgical plant, mineral
processing plant, wastewater treatment plant, and supporting infrastructure systems.
|
|
·
|
Cost Estimating: We are securing multiple vendor cost estimates on major equipment and process systems as design engineering
for those systems is advanced. This involves providing a Feasibility Study-level engineering specification to each vendor in order
to get a Feasibility Study-level estimate for the cost of each major piece of equipment. These quotes are important in estimating
costs of construction, a key input to the Feasibility Study.
|
|
·
|
Updates to Market Studies for Planned Commercial Products: Given that previously commissioned market studies are more than
one year old, we are having these updated. These updates have been completed as of April 13, 2017.
|
|
·
|
Final CAPEX/OPEX Estimates: Once all design engineering, cost estimates, and other inputs are finalized, this data is integrated
into the Feasibility Study Technical Economic Model, which will provide project CAPEX, mining rates, production rates, and OPEX.
The model is prepared with a targeted CAPEX and OPEX accuracy of +/-15%. The model will reflect a detailed construction and commissioning
schedule for all aspects of the Project.
|
|
·
|
Final Review of Feasibility Study Prior to Release: A careful review will be conducted of the Feasibility Study documents to
ensure consistency across its many elements.
|
Once these remaining steps have been completed,
we will announce the Feasibility Study results and findings, followed by the required filing of the complete Feasibility Study
Technical Report within 45 days of such announcement.
In the eighteen months since the publication of our October 2015 PEA, we have spent approximately $11.7
million in exploration related expenditures. We have embarked upon additional spending relating to the Feasibility Study to focus on additional engineering work including
the design work relating to recycling, the mixed oxides waste stream analysis, further refining Nb recovery studies and acid regeneration
kinetics testing. This increased scope has increased the expected costs relating to the Feasibility Study for the
fourth quarter of fiscal 2017 from $0.2 – $0.3 million to approximately $1.0 million. Additional information about the Elk
Creek Project is provided in the section entitled “Business
– Elk Creek Project Update” of this prospectus.
The
Offering
Securities Offered by the Selling Shareholders
|
7,307,105 Common Shares and 3,768,555
Warrants to Purchase Common Shares, including:
·
3,538,550
Common Shares issued to selling shareholders in connection with the Private Placement;
·
3,538,550
warrants to purchase one Common Share exercisable at a price per Common Share of C$0.85 (the “Selling Shareholder
Warrants”) issued to selling shareholders in connection with the Private Placement;
·
3,538,550
Common Shares issuable upon exercise of the Selling Shareholder Warrants;
·
230,005
warrants to purchase one Common Share exercisable at a price per Common Share of C$0.65 (the “Compensation Warrants”
and, collectively with the Selling Shareholder Warrants, the “Warrants”) issued to certain selling shareholders for
services rendered to us in connection with the Private Placement; and
·
230,005
Common Shares issuable upon exercise of the Compensation Warrants.
|
|
|
Offering Price
|
Determined at the time of sale by the selling shareholders
|
|
|
Use of Proceeds
|
We will not receive any proceeds from the resale of the Common Shares or the Warrants by the selling shareholders. However, upon exercise we will receive the cash exercise price of the Warrants.
|
|
|
Common Shares Outstanding as of
June
1, 2017
|
197,819,163 Common Shares
|
|
|
OTCQX and TSX Trading Symbol
|
The Common Shares are quoted on the OTCQX under the symbol “NIOBF” and listed on the TSX under the symbol “NB”. Our Warrants have not been and will not be quoted on the TSX.
|
|
|
Risk Factors
|
Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page
12 of this prospectus.
|
|
|
Dividend Policy
|
We currently intend to retain any future earnings to fund
the development and growth of our business. Therefore, we do not currently anticipate paying cash dividends.
|
|
|
Terms of Warrants
|
The Warrants will be governed under the terms of a warrant indenture
dated as of the Closing Date between the Company and Computershare Trust Company of Canada as warrant agent. See “Description
of Capital Stock―Warrants” of this prospectus.
|
Summary Financial Information
The following tables
summarize our financial data for the periods presented. The summary statements of operations and comprehensive loss for the years
ended June 30, 2016 and 2015, and the statement of financial position as of June 30, 2016 and 2015 have been derived from
our audited financial statements, which are included elsewhere in this prospectus. The summary statements of operations and comprehensive
loss for the nine months ended March 31, 2017 and 2016, and the statement of financial position as of March 31, 2017, have been
derived from our unaudited financial statements, which are included elsewhere in this prospectus. The historical results are not
necessarily indicative of the results to be expected for any future periods. You should read this data together with our financial
statements and the related notes included elsewhere in this prospectus, as well as “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” beginning on page 95 of this prospectus.
Statements of Operations and Comprehensive Loss ($000)
|
|
Years Ended June 30
|
|
|
|
2016
|
|
|
2015
|
|
Total revenue
|
|
$
|
–
|
|
|
$
|
–
|
|
Total operating expenses
|
|
|
9,518
|
|
|
|
25,480
|
|
Net loss
|
|
|
11,408
|
|
|
|
23,115
|
|
Basic and diluted loss per share
|
|
|
0.07
|
|
|
|
0.17
|
|
|
|
Nine months ended
March 31
|
|
|
|
2017
|
|
|
2016
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
Total revenue
|
|
$
|
–
|
|
|
$
|
–
|
|
Total operating expenses
|
|
|
10,405
|
|
|
|
5,825
|
|
Net loss
|
|
|
10,931
|
|
|
|
8,053
|
|
Basic and diluted loss per share
|
|
|
0.06
|
|
|
|
0.05
|
|
Statements of Financial Position ($000)
|
|
As at
|
|
|
|
March 31,
2017
|
|
|
June 30,
2016
|
|
|
June 30,
2015
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
12,918
|
|
|
$
|
15,246
|
|
|
$
|
11,575
|
|
Total liabilities
|
|
|
8,696
|
|
|
|
9,052
|
|
|
|
6,564
|
|
Total shareholders’ equity
|
|
|
4,222
|
|
|
|
6,194
|
|
|
|
5,011
|
|
Description of Private Placement
The Private Placement
On May 16, 2017, the Company entered
into an underwriting agreement (the “Underwriting Agreement”), subject to regulatory approval, with Mackie
Research Capital Corporation (“Mackie”), pursuant to which Mackie has agreed to purchase, on a bought deal short
form prospectus basis, 3,077,000 units of the Company (the “Units”) at a price of C$0.65 per Unit (the
“Private Placement”), subject to an option to increase the size of the Private Placement by up to 15% in
Units (the “Overallotment Option”). Each Unit will consist of one Common Share and one transferable Common
Share purchase warrant (collectively, the “Selling Shareholder Warrants”), with each Selling Shareholder
Warrant entitling the holder to acquire one Common Share at a price of C$0.85 at any time prior to the date which is 36
months following the closing date of the Private Placement (the “Closing Date”). This prospectus assumes
that Mackie will exercise the Overallotment Option in full on the Closing Date. As a result, we expect to issue an aggregate
of 3,538,550 Units on the Closing Date in connection with the Private Placement. Assuming the exercise of the Overallotment
Option in full on the Closing Date, we expect to receive estimated net proceeds, after the payment of related fees and
expenses, of approximately C$2.0 million from the sale of the Units in the Private Placement. Pursuant to the Underwriting
Agreement, the settlement of the Private Placement, and our receipt of the net proceeds therefrom, will not occur until the
registration statement to which this prospectus relates is declared effective by the SEC.
In connection with the closing of the
Private Placement and assuming the exercise of the Overallotment Option in full on the Closing Date, Mackie will receive a
total cash commission of C$149,504 and 230,005 non-transferable Common Share purchase warrants (collectively, the
“Compensation Warrants”), with each Compensation Warrant entitling the holder to acquire one Common Share at a
price of C$0.65 at any time prior to the date which is 36 months from the Closing Date.
Warrant Indenture
The Warrants will be governed under the terms
of a warrant indenture dated as of the Closing Date (the “Warrant Indenture”) between the Company and Computershare
Trust Company of Canada as warrant agent.
The Warrant Indenture will provide that in
the event there is a subdivision, consolidation, reclassification, or other change of the Common Shares into a greater or lesser
number of Common Shares or other securities of NioCorp, the terms of the Common Shares issuable on conversion of such warrants
and the exercise price of such warrants will be adjusted accordingly.
Registration of Common Shares and Warrants Issued in the Private
Placement
The Common Shares and Warrants to be issued
in the Private Placement will be issued to investors based on the representations of such investors to the Company pursuant to
the exclusion from the registration requirements of the Securities Act provided by Regulation S under the Securities Act.
Under the terms of the Underwriting Agreement,
we have agreed, subject to certain conditions, to file a registration statement (the “Registration Statement”) with
the United States Securities and Exchange Commission under the Securities Act to register the: (i) Common Shares issued to
selling shareholders in connection with the Private Placement; (ii) Selling Shareholder Warrants issued to selling shareholders
in connection with the Private Placement; (iii) Common Shares issuable upon exercise of the Selling Shareholder Warrants;
(iv) Compensation Warrants issued to Mackie for services rendered to us in connection with the Private Placement; and (v) Common
Shares issuable upon exercise of the Compensation Warrants. We are filing this prospectus and the Registration Statement pursuant
to our contractual obligations under the Underwriting Agreement.
The settlement of the Private
Placement, and the Company's receipt of the net proceeds therefrom, will not occur until (i) the Company files the
Registration Statement with the United States Securities and Exchange Commission and (ii) the Registration Statement is
declared effective.
Prior to requesting the effectiveness
of the Registration Statement, the Company, as part of the Private Placement, will file a final short form prospectus
(the “Final Short Form Prospectus”) with the Ontario Securities Commission (the “OSC”), as the
principal regulator of the Company, pursuant to National Instrument 44-101 – Short Form Prospectus Distributions,
Multilateral Instrument 11-202 – Passport System and National Policy 11-202 – Process for Prospectus Review in
Multiple Jurisdictions. Upon filing of the Final Short Form Prospectus and all other necessary documentation with the OSC,
the OSC will provide a receipt for the Final Short Form Prospectus and the Company will request effectiveness of
the Registration Statement. Promptly thereafter, the Company will settle the Private Placement and distribute the Common
Shares and Warrants to the selling stockholders.
Risk
Factors
Investing in the Common Shares
or Warrants involves a high degree of risk. You should consider carefully the risks and uncertainties described below,
together with all of the other information contained in this prospectus, before deciding to invest in the Common Shares
or Warrants. If
any of the following risks materialize, our business, financial condition, results of operation, and future prospects will
likely be materially and adversely affected. In that event, the market price of the Common Shares
or Warrants could decline and you could
lose all or part of your investment.
Risks Related To Our Company
Our ability to operate as a going concern is in doubt.
The audit opinion and
notes that accompany our financial statements for the year ended June 30, 2016, disclose a going concern qualification to our ability
to continue in business. The accompanying financial statements have been prepared under the assumption that we will continue as
a going concern. We are an exploration stage company and we have incurred losses since our inception.
We currently have no historical
recurring source of revenue and our ability to continue as a going concern is dependent on our ability to raise capital to fund
our future exploration and working capital requirements or our ability to profitably execute our business plan. Our plans for the
long-term return to and continuation as a going concern include financing our future operations through sales of our common stock
and/or debt and the eventual profitable exploitation of our Elk Creek Project. Additionally, the current capital markets and general
economic conditions in the United States are significant obstacles to raising the required funds. These factors raise substantial
doubt about our ability to continue as a going concern.
These consolidated financial
statements do not give effect to any adjustments required to realize its assets and discharge its liabilities in other than the
normal course of business and at amounts different from those reflected in the accompanying financial statements.
We will require significant additional capital to fund our
business plan.
We will be required to
expend significant funds to determine if proven and probable mineral reserves exist at our properties, to continue exploration
and, if warranted, to develop our existing properties, and to identify and acquire additional properties to diversify our property
portfolio. We anticipate that we will be required to make substantial capital expenditures for the continued exploration and,
if warranted, development of our Elk Creek Project. We have spent and will be required to continue to expend significant amounts
of capital for drilling, geological, and geochemical analysis, assaying, and feasibility studies with regard to the results of
our exploration at our Elk Creek Project. We may not benefit from some of these investments if we are unable to identify commercially
exploitable mineral reserves.
As of April 30,
2017, the Company had cash of approximately $1.4 million and a working capital deficiency of approximately $0.6 million,
compared to cash of $1.9 million and working capital of $0.3 million on March 31, 2016, and compared to cash of $4.4 million
and working capital of $2.3 million on June 30, 2016. As of April 30, 2017, the Company’s planned operational needs for
the entire fourth quarter of fiscal 2017 are approximately $2.3 million until June 30, 2017. The Company expects that the
net proceeds from the Private Placement will provide sufficient capital for the next one to two months following the release
of the results of the Elk Creek Feasibility Study. However, the settlement of the Private Placement, and
our receipt of the net proceeds therefrom, will not occur until the registration statement to which this prospectus relates
is declared effective by the SEC. Any delay in the settlement of the Private Placement, or the Company's inability to settle
the Private Placement, could have a material adverse effect on the Company's financial condition, results of operations,
or prospects. We are actively pursuing additional sources of debt and equity financing, and while we have been successful
in doing so in the past, there can be no assurance we will be able to do so in the future.
Our ability to obtain
necessary funding for these purposes, in turn, depends upon a number of factors, including the status of the national and worldwide
economy and the price of metals. Capital markets worldwide have been adversely affected by substantial losses by financial institutions,
caused by investments in asset-backed securities. We may not be successful in obtaining the required financing or, if we can obtain
such financing, such financing may not be on terms that are favorable to us.
Our inability to access
sufficient capital for our operations could have a material adverse effect on our financial condition, results of operations, or
prospects. Sales of substantial amounts of securities may have a highly dilutive effect on our ownership or share structure. Sales
of a large number of Common Shares in the public markets, or the potential for such sales, could decrease the trading price of
the Common Shares and could impair our ability to raise capital through future sales of Common Shares. We have not yet commenced
commercial production at any of our properties and, as such, have not generated positive cash flows to date and have no reasonable
prospects of doing so unless successful commercial production can be achieved at our Elk Creek Project. We expect to continue to
incur negative investing and operating cash flows until such time as we enter into successful commercial production. This will
require us to deploy our working capital to fund such negative cash flow and to seek additional sources of financing. There is
no assurance that any such financing sources will be available or sufficient to meet our requirements. There is no assurance that
we will be able to continue to raise equity capital or to secure additional debt financing, or that we will not continue to incur
losses.
We have a limited operating history on which to base an evaluation
of our business and prospects.
Since our inception, we
have had no revenue from operations. We have no history of producing products from any of our properties. Our Elk Creek Project
is in the exploration stage. Advancing our Elk Creek Project from exploration into the development stage will require significant
capital and time, and successful commercial production from Elk Creek will be subject to completing feasibility studies, permitting
and construction of the mine, processing plants, roads, and other related works and infrastructure. As a result, we are subject
to all of the risks associated with developing and establishing new mining operations and business enterprises including:
|
·
|
completion of feasibility studies to verify reserves and commercial viability, including the ability
to find sufficient ore reserves to support a commercial mining operation;
|
|
·
|
the timing and cost, which can be considerable, of further exploration, preparing feasibility studies,
permitting and construction of infrastructure, mining and processing facilities;
|
|
·
|
the availability and costs of drill equipment, exploration personnel, skilled labor, and mining
and processing equipment, if required;
|
|
·
|
the availability and cost of appropriate smelting and/or refining arrangements, if required;
|
|
·
|
compliance with environmental and other governmental approval and permit requirements;
|
|
·
|
the availability of funds to finance exploration, development, and construction activities, as
warranted;
|
|
·
|
potential opposition from non-governmental organizations, local groups or local inhabitants that
may delay or prevent development activities;
|
|
·
|
potential increases in exploration, construction, and operating costs due to changes in the cost
of fuel, power, materials, and supplies; and
|
|
·
|
potential shortages of mineral processing, construction, and other facilities related supplies.
|
The costs, timing, and
complexities of exploration, development, and construction activities may be increased by the location of our properties and demand
by other mineral exploration and mining companies. It is common in exploration programs to experience unexpected problems and delays
during drill programs and, if commenced, development, construction, and mine start-up. Accordingly, our activities may not result
in profitable mining operations and we may not succeed in establishing mining operations or profitably producing metals at any
of our current or future properties, including our Elk Creek Project.
We have a history of losses and expect to continue to incur
losses in the future.
We have incurred losses
since inception, have negative cash flow from operating activities, and expect to continue to incur losses in the future. We incurred
the following losses from operations during each of the following periods ($000):
|
·
|
$11,408 for the year ended June 30, 2016;
|
|
·
|
$23,115 for the year ended June 30, 2015;
|
|
·
|
$10,931 for the nine months ended March 31, 2017; and
|
|
·
|
$8,053 for the nine months ended March 31, 2016.
|
We expect to continue
to incur losses unless and until such time as one of our properties enters into commercial production and generates sufficient
revenues to fund continuing operations. We recognize that if we are unable to generate significant revenues from mining operations
and dispositions of our properties, we will not be able to earn profits or continue operations. At this early stage of our operation,
we also expect to face the risks, uncertainties, expenses, and difficulties frequently encountered by companies at the start-up
stage of their business development. We cannot be sure that we will be successful in addressing these risks and uncertainties and
our failure to do so could have a materially adverse effect on our financial condition.
Increased costs could affect our financial condition.
We anticipate that costs
at our projects that we may explore or develop will frequently be subject to variation from one year to the next due to a number
of factors, such as changing ore grade, metallurgy, and revisions to mine plans, if any, in response to the physical shape and
location of the ore body. In addition, costs are affected by the price of commodities such as fuel, steel, rubber, chemicals, and
electricity. Such commodities are at times subject to volatile price movements, including increases that could make production
at certain operations less profitable or not profitable at all. A material increase in costs at any significant location could
have a significant effect on our profitability.
Risks Related to Mining and Exploration
All of our properties, including the
Elk Creek Project, are in the exploration stage. There is no assurance that we can establish the existence of any mineral reserve
on the Elk Creek Project or any of our properties in commercially exploitable quantities. Unless and until we do so, we cannot
earn any revenues from these properties and if we do not do so we will lose all of the funds that we expend on exploration. If
we do not discover any mineral reserve in a commercially exploitable quantity, the exploration component of our business could
fail.
We have not established
that any of our mineral properties contain any mineral reserve according to recognized reserve guidelines, nor can there be any
assurance that we will be able to do so.
A mineral reserve is defined
by the SEC in its Industry Guide 7 as that part of a mineral deposit that could be economically and legally extracted or produced
at the time of the reserve determination. In general, the probability of any individual prospect having a “reserve”
that meets the requirements of the SEC’s Industry Guide 7 is small, and our mineral properties may not contain any “reserves”
and any funds that we spend on exploration could be lost. Even if we do eventually discover a mineral reserve on one or more of
our properties, there can be no assurance that they can be developed into producing mines and that we can extract those minerals.
Both mineral exploration and development involve a high degree of risk, and few mineral properties that are explored are ultimately
developed into producing mines.
The commercial viability
of an established mineral deposit will depend on a number of factors including, by way of example, the size, grade, and other attributes
of the mineral deposit, the proximity of the mineral deposit to infrastructure such processing facilities, roads, rail, power,
and a point for shipping, government regulation, and market prices. Most of these factors will be beyond our control, and any of
them could increase costs and make extraction of any identified mineral deposit unprofitable.
Feasibility study results and preliminary
economic assessment estimates are based on assumptions that are subject to uncertainty. A preliminary economic assessment, such
as our October 2015 PEA, does not have as high of a level of confidence as a feasibility study and the estimates may not reflect
actual capital and operating costs and potential revenues from any potential future production.
Feasibility studies are
used to determine the economic viability of a mineral deposit. Pre-feasibility studies and preliminary economics assessments are
also used for this purpose but have a much higher degree of uncertainty compared to a feasibility study. Feasibility studies are
the most detailed and reflect a higher level of confidence in the reported capital and operating costs. Generally accepted levels
of confidence in the mining industry are plus or minus 15% for feasibility studies, plus or minus 25-30% for pre-feasibility studies
and plus or minus 35-40% for preliminary economic assessments. These levels reflect the levels of confidence that exist at the
time the study is completed. While these studies are based on the best information available to us for the level of study, we cannot
be certain that actual costs will not significantly exceed the estimated cost. While we incorporate what we believe is an appropriate
contingency factor in cost estimates to account for this uncertainty, there can be no assurance that the contingency factor is
adequate.
The economic viability of a deposit based
on resources and a preliminary economic assessment, such as our October 2015 PEA for the Elk Creek Project, is based on many assumptions
and factors that are subject to uncertainty. Resources may never be converted to reserves and the cost estimates in the preliminary
economics assessment may be underestimated to a material degree thereby negatively impacting the potential economic viability of
the project.
Many factors are involved
in the determination of the economic viability of a deposit, including the achievement of satisfactory mineral reserve estimates,
the level of estimated metallurgical recoveries and capital and operating cost estimates. Resource estimates are based on the results
of many drill holes and the interpolation of those results between holes and such interpolations may not be accurate of the actual
mineralization at the project. Estimates in preliminary economic assessments, like our October 2015 PEA for the Elk Creek Project,
are particularly speculative and historically such studies have underestimated project capital and operating costs. The mine plan
and processing concepts in our October 2015 PEA are preliminary in nature and may not reflect the actual mine plan or processing
concepts in a feasibility study for our Elk Creek Project.
In preliminary economic
assessments, process analysis is typically limited to testing of small samples or bench scale testing. There is no certainty that
anticipated metallurgical recoveries from a preliminary economics assessment obtained in bench scale or pilot plant scale tests
will be achieved in commercial scale operations due to difficulties in upscaling from a pilot plant to commercial scale operations,
including but not limited to additional unanticipated capital costs in constructing the commercial scale operations and unforeseen
losses in recovery of product in processing at the commercial scale. At the preliminary economic assessment stage, metallurgical
flow sheets and recoveries are still in development and may change materially as the project moves towards a feasibility study.
Capital and operating cost estimates are based upon many factors, including anticipated tonnage and grades of ore to be mined and
processed, the configuration of the orebody, ground and mining conditions, expected recovery rates of product, and anticipated
environmental and regulatory compliance costs. Additionally, the economic feasibility of exploiting a mineral deposit may change
as the result of changing commodity and supply costs. Each of these factors involves uncertainties and as a result, we cannot give
any assurance that our Elk Creek Project will be economical. If a mine is developed at our Elk Creek Project, actual capital and
operating costs, production results, mine plans and processing concepts may differ materially from those anticipated in our current
2015 October PEA.
The nature of mineral exploration and production activities
involves a high degree of risk and the possibility of uninsured losses.
Exploration for and the
production of minerals is highly speculative and involves much greater risk than many other businesses. Most exploration programs
do not result in the discovery of mineralization, and any mineralization discovered may not be of sufficient quantity or quality
to be profitably mined. Our operations are, and any future development or mining operations we may conduct will be, subject to
all of the operating hazards and risks normally incident to exploring for and development of mineral properties, such as, but not
limited to:
|
·
|
economically insufficient mineralized material;
|
|
·
|
fluctuation in production costs that make mining uneconomical;
|
|
·
|
unanticipated variations in grade and other geologic problems;
|
|
·
|
difficult surface or underground conditions;
|
|
·
|
metallurgic and other processing problems;
|
|
·
|
mechanical and equipment performance problems;
|
|
·
|
failure of dams, stockpiles, wastewater transportation systems, or impoundments;
|
|
·
|
unusual or unexpected rock formations; and
|
|
·
|
personal injury, fire, flooding, cave-ins and landslides.
|
Any of these risks can
materially and adversely affect, among other things, the development of properties, production quantities and rates, costs and
expenditures, potential revenues, and production dates. We currently have very limited insurance to guard against some of these
risks. If we determine that capitalized costs associated with any of our mineral interests are not likely to be recovered, we would
incur a write-down of our investment in these interests. All of these factors may result in losses in relation to amounts spent
that are not recoverable, or that result in additional expenses.
We have no history of producing commercial products from our
current mineral properties and there can be no assurance that we will successfully establish mining operations or profitably produce
minerals.
We have no history of
producing commercial products from our current mineral properties. We do not produce commercial products and do not currently generate
operating earnings. While we seek to move our Elk Creek Project out of exploration and into development and production, such efforts
will be subject to all of the risks associated with establishing new mining operations and business enterprises, including:
|
·
|
the timing and cost, which are considerable, of the construction of mining and processing facilities;
|
|
·
|
the availability and costs of skilled labor and mining equipment;
|
|
·
|
compliance with environmental and other governmental approval and permit requirements;
|
|
·
|
the availability of funds to finance construction and development activities;
|
|
·
|
potential opposition from non-governmental organizations, local groups or local inhabitants that
may delay or prevent development activities; and
|
|
·
|
potential increases in construction and operating costs due to changes in the cost of labor, fuel,
power, materials and supplies.
|
It is common in new mining
operations to experience unexpected problems and delays during construction, development and mine start-up. In addition, our management
and workforce will need to be expanded, and sufficient housing and other support systems for our workforce will have to be established.
This could result in delays in the commencement of mineral production and increased costs of production. Accordingly, we cannot
assure you that our activities will result in profitable mining operations or that we will successfully establish mining operations.
Results of metallurgical testing by us may not be favorable
or as expected by us.
We have completed significant
bench, mini-pilot, and pilot scale metallurgical testing on material from the Elk Creek Project, and will continue to complete
necessary metallurgical testing at the bench, mini-pilot, and pilot scale as the exploration and, if warranted, development of
the Elk Creek Project progresses. There can be no assurance that the results of such metallurgical testing will be favorable or
will be as expected by us. Furthermore, there can be no certainty that metallurgical recoveries obtained in bench or pilot scale
tests will be achieved in either subsequent testing or commercial operations. The development of a complete metallurgical process
to produce a saleable final product from the Elk Creek Project is a complex and resource intensive undertaking that may result
in overall schedule delays and increased project costs for us.
Price volatility could have dramatic effects on the results
of operations and our ability to execute our business plan.
The price of commodities
varies on a daily basis. Niobium is a specialty metal and not a commonly traded commodity such as copper, zinc, gold, or iron ore.
The price of niobium tends to be set through a limited long-term offtake market, contracted between very few suppliers and purchasers.
The world’s largest supplier of niobium, Companhia Brasileira de Metalurgia e Mineração (CBMM), supplies approximately
85% of the world’s niobium. Any attempt to suppress the price of niobium by such supplier, or an increase in production by
any supplier in excess of any increased demand, would have negative consequences on the price of niobium and, potentially, on our
value. The price of niobium may also be reduced by the discovery of new niobium deposits, which could not only increase the overall
supply of niobium (causing downward pressure on its price), but could draw new firms into the niobium industry that would compete
with us.
Scandium trioxide is used
in solid oxide fuel cells and has the potential to become a valuable alloy with aluminum in the aerospace and automotive industries.
Supply of scandium has been sporadic in recent years, and there are no primary scandium mines in the world at present. Production
primarily occurs as a byproduct from rare earth, titanium, and aluminum plants, primarily in Russia and China. Our management believes
the Elk Creek Project would significantly increase the world’s supply of scandium trioxide. Although the Company’s
market studies indicate a positive outlook for demand, there is no assurance at present that the Company could sell all of its
production. In addition, the sale of scandium represents a significant portion of the Elk Creek Project revenue; achieving the
revenue projected in the Company’s studies is subject to market growth in scandium, which is a developing market with a risk
of oversupply and/or undersupply disrupting pricing.
Titanium metal is used
in various superalloys and other applications for aerospace applications, armor, and medical implants and in oxide form is a key
component of pigments used in paper, paint, and plastics. The Elk Creek Project would produce a small quantity of titanium dioxide
relative to other producers. As a small producer, we would be subject to fluctuations in the price of titanium dioxide that would
result from normal variations in supply and demand for this commodity.
Estimates of mineralized material and resources are subject
to evaluation uncertainties that could result in project failure.
Our exploration and future
mining operations, if any, are and would be faced with risks associated with being able to accurately predict the quantity and
quality of mineralized material and resources/reserves within the earth using statistical sampling techniques. Estimates of any
mineralized material or resource/reserve on any of our properties would be made using samples obtained from appropriately placed
trenches, test pits, underground workings, and intelligently designed drilling. There is an inherent variability of assays between
check and duplicate samples taken adjacent to each other and between sampling points that cannot be reasonably eliminated. Additionally,
there also may be unknown geologic details that have not been identified or correctly appreciated at the current level of accumulated
knowledge about our properties. This could result in uncertainties that cannot be reasonably eliminated from the process of estimating
mineralized material and resources/reserves. If these estimates were to prove to be unreliable, we could implement an exploitation
plan that may not lead to commercially viable operations in the future.
Any material changes in mineral resource/reserve estimates
and grades of mineralization will affect the economic viability of placing a property into production and a property’s return
on capital.
As we have not completed
feasibility studies on any of our properties and have not commenced actual production, mineralization resource estimates may require
adjustments or downward revisions. In addition, the grade of ore ultimately mined, if any, may differ from that indicated by our
feasibility studies and drill results. Minerals recovered in small scale tests may not be duplicated in large scale tests under
on-site conditions or in production scale.
The resource estimates
contained in this prospectus have been determined based on assumed future prices, cut-off grades, and operating costs that may
prove to be inaccurate. Extended declines in market prices for our products may render portions of our mineralization and resource
estimates uneconomic and may result in reduced reported mineralization or may adversely affect any commercial viability determinations
we may reach. Any material reductions in estimates of mineralization, or of our ability to extract this mineralization, could have
a material adverse effect on our share price and on the value of our properties.
There are differences in U.S. and Canadian practices for reporting
reserves and resources.
Our reserve and resource
estimates are not directly comparable to those made in filings subject to SEC reporting and disclosure requirements, as we generally
report reserves and resources in accordance with Canadian requirements. These requirements are different from the practices used
to report reserve and resource estimates in reports and other materials filed with the SEC. It is Canadian practice to report measured,
indicated, and inferred mineral resources, which are generally not permitted in disclosure filed with the SEC by United States
issuers. In the United States, mineralization may not be classified as a “reserve” unless the determination has been
made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made.
United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever
be converted into reserves.
Further, “inferred
mineral resources” have a great amount of uncertainty as to their existence and as to whether they can be mined legally or
economically. Our disclosure of the results of our mining operations is permitted disclosure under Canadian regulations; however,
the SEC only permits issuers to report “resources” as in-place tonnage and grade, without reference to unit measures.
Accordingly, information
concerning descriptions of mineralization, reserves and resources contained in this prospectus, or in the documents incorporated
herein by reference, may not be comparable to information made public by other United States companies subject to the reporting
and disclosure requirements of the SEC.
Our exploration activities on our properties may not be commercially
successful, which could lead us to abandon our plans to develop our properties and our investments in exploration.
Our long-term success
depends on our ability to identify mineral deposits on our existing properties and other properties we may acquire, if any, that
we can then develop into commercially viable mining operations. Mineral exploration is highly speculative in nature, involves many
risks, and is frequently non-productive. These risks include unusual or unexpected geologic formations, and the inability to obtain
suitable or adequate machinery, equipment, or labor. The success of commodity exploration is determined in part by the following
factors:
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the identification of potential mineralization based on surficial analysis;
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availability of government-granted exploration permits;
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the quality of our management and our geological and technical expertise; and
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the capital available for exploration and development work.
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Substantial expenditures
are required to establish proven and probable reserves through drilling and analysis, to develop metallurgical processes to extract
metal, and to develop the mining and processing facilities and infrastructure at any site chosen for mining. Whether a mineral
deposit will be commercially viable depends on a number of factors that include, without limitation, the particular attributes
of the deposit, such as size, grade, and proximity to infrastructure; commodity prices, which can fluctuate widely; and government
regulations, including, without limitation, regulations relating to prices, taxes, royalties, land tenure, land use, importing
and exporting of minerals, and environmental protection. We may invest significant capital and resources in exploration activities
and may abandon such investments if we are unable to identify commercially exploitable mineral reserves. The decision to abandon
a project may have an adverse effect on the market value of our securities and the ability to raise future financing.
We may not be able to obtain or renew all required permits
and licenses to place any of our properties into production.
Our current and future
operations, including development activities and commencement of production, if warranted, on the Elk Creek Project, require permits
from governmental authorities and such operations are and will be governed by laws and regulations governing prospecting, development,
mining, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, land use, environmental
protection, mine safety, and other matters. Companies engaged in mineral property exploration and the development or operation
of mines and related facilities generally experience increased costs, as well as delays in production and other schedules as a
result of the need to comply with applicable laws, regulations, and permits. We cannot predict if all permits that we may require
for continued exploration, development, or construction of mining facilities and conduct of mining operations will be obtainable
or renewable on reasonable terms, if at all. Costs related to applying for and obtaining permits and licenses may be prohibitive
and could delay our planned exploration and development activities. Failure to comply with applicable laws, regulations, and permitting
requirements may result in enforcement actions, including orders issued by regulatory or judicial authorities causing operations
to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment,
or remedial actions.
Facilities associated
with the Elk Creek Project, such as the mine, surface plant, tailings facilities, stockpiles and supporting infrastructure, are
likely to either temporarily or permanently impact waterbodies and wetlands that are subject to regulation by the USACE as Waters
of the United States (“WOUS”). The Company expects the USACE to require us to obtain and maintain a permit for the
project. The duration of this permitting exercise is dictated by the USACE, and would need to be completed before facilities that
would impact WOUS could be constructed. We may experience delays or additional costs in relation to obtaining the necessary permit
and these delays and additional costs could negatively affect the economics of the Elk Creek Project and our results of operations.
Parties engaged in mining
operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or
criminal fines or penalties imposed for violations of applicable laws or regulations. Amendments to current laws, regulations,
and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material
adverse impact on our operations and cause increases in capital expenditures or production costs or reduction in levels of production
at producing properties or require abandonment or delays in development of new mining properties.
We are subject to significant governmental regulations that
affect our operations and costs of conducting our business.
Our current and future
operations, including exploration and, if warranted, development of the Elk Creek Project, are and will be governed by laws and
regulations, including:
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laws and regulations governing mineral concession acquisition, prospecting, development, mining,
and production;
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laws and regulations related to exports, taxes, and fees;
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labor standards and regulations related to occupational health and mine safety; and
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environmental standards and regulations related to waste disposal, toxic substances, land use reclamation,
and environmental protection.
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Companies engaged in exploration
activities often experience increased costs and delays in production and other schedules as a result of the need to comply with
applicable laws, regulations, and permits. Failure to comply with applicable laws, regulations, and permits may result in enforcement
actions, including the forfeiture of mineral claims or other mineral tenures, orders issued by regulatory or judicial authorities
requiring operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation
of additional equipment, or costly remedial actions. We may be required to compensate those suffering loss or damage by reason
of our mineral exploration activities and may have civil or criminal fines or penalties imposed for violations of such laws, regulations,
and permits.
Existing and possible
future laws, regulations, and permits governing operations and activities of exploration companies, or more stringent implementation,
could have a material adverse impact on our business and cause increases in capital expenditures or require abandonment or delays
in exploration. Our Elk Creek Project is located in Nebraska, and Nebraska does not have clearly defined regulations with respect
to permitting mines which could potentially impact the total time to market for the project.
Our activities are subject to environmental laws and regulations
that may increase our costs of doing business and restrict our operations.
All phases of our operations
are subject to environmental regulation in the jurisdictions in which we operate. Environmental legislation is evolving in a manner
that may require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental
assessments of proposed projects, and a heightened degree of responsibility for companies and their officers, directors, and employees.
These laws address emissions into the air, discharges into water, management of waste, management of hazardous substances, protection
of natural resources, antiquities and endangered species, and reclamation of lands disturbed by mining operations. Compliance with
environmental laws and regulations, and future changes in these laws and regulations, may require significant capital outlays and
may cause material changes or delays in our operations and future activities. It is possible that future changes in these laws
or regulations could have a significant adverse impact on our properties or some portion of our business, causing us to re-evaluate
those activities at that time.
Regulations and pending legislation governing issues involving
climate change could result in increased operating costs, which could have a material adverse effect on our business.
A number of governments
or governmental bodies have introduced or are contemplating legislative and/or regulatory changes in response to concerns about
the potential impact of climate change. Legislation and increased regulation regarding climate change could impose significant
costs on us, on our future venture partners, if any, and on our suppliers, including costs related to increased energy requirements,
capital equipment, environmental monitoring and reporting, and other costs necessary to comply with such regulations. Any adopted
future climate change regulations could also negatively impact our ability to compete with companies situated in areas not subject
to such limitations. Given the emotion, political significance, and uncertainty surrounding the impact of climate change and how
it should be dealt with, we cannot predict how legislation and regulation will affect our financial condition, operating performance,
and ability to compete. Furthermore, even without such regulation, increased awareness and any adverse publicity in the global
marketplace about potential impacts on climate change by us or other companies in our industry could harm our reputation. The potential
physical impacts of climate change on our operations are highly uncertain, and could be particular to the geographic circumstances
in areas in which we operate and may include changes in rainfall and storm patterns and intensities, water shortages, changing
sea levels, and changing temperatures. These impacts may adversely impact the cost, production, and financial performance of our
operations.
Land reclamation requirements for our properties may be burdensome
and expensive.
Although variable depending
on location and the governing authority, land reclamation requirements are generally imposed on mineral exploration companies (as
well as companies with mining operations) in order to minimize long term effects of land disturbance.
Reclamation may include
requirements to:
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control dispersion of potentially deleterious effluents;
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treat ground and surface water to drinking water standards; and
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reasonably re-establish pre-disturbance land forms and vegetation.
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In order to carry out
reclamation obligations imposed on us in connection with our potential development activities, we must allocate financial resources
that might otherwise be spent on further exploration and development programs. We plan to set up a provision for our reclamation
obligations on our properties, as appropriate, but this provision may not be adequate. If we are required to carry out unanticipated
reclamation work, our financial position could be adversely affected.
We face intense competition in the mining industry.
The mining industry is
intensely competitive in all of its phases. As a result of this competition, some of which is with large established mining companies
with substantial capabilities and with greater financial and technical resources than ours, we may be unable to acquire additional
properties, if any, or financing on terms we consider acceptable. We also compete with other mining companies in the recruitment
and retention of qualified managerial and technical employees. If we are unable to successfully compete for qualified employees,
our exploration and development programs may be slowed down or suspended. We compete with other companies that produce our planned
commercial products for capital. If we are unable to raise sufficient capital, our exploration and development programs may be
jeopardized or we may not be able to acquire, develop, or operate additional mining projects.
Difficulties in handling the disposal of waste waters at our
Elk Creek Project could negatively affect our potential production and economics at the project.
The Company has conducted
three investigations into the hydrogeology of the Elk Creek carbonatite, which is the geologic formation which hosts the mineralized
material that would be extracted by the Company’s mining operations. The Company expects to encounter significant amounts
of water in the carbonatite, which will need to be pumped out of the formation to facilitate a mining operation. Water quality
analyses have demonstrated that this water will have elevated temperature and salt content when compared to other water resources
in the area. While the Company has developed proposals to manage the water through treatment and/or discharge, there is a risk
that the costs associated with these management practices will negatively impact the Elk Creek Project’s overall economics.
There is no guarantee that the permits needed for the treatment and/or discharge of the water will be issued by the state of Nebraska
or the USACE, nor is there any guarantee that such permits will be issued in a timely fashion.
A shortage of equipment and supplies could adversely affect
our ability to operate our business.
We are dependent on various
supplies and equipment to carry out our mining exploration and, if warranted, development operations. The shortage of such supplies,
equipment, and parts could have a material adverse effect on our ability to carry out our operations and could therefore limit,
or increase the cost of, production.
Joint ventures and other partnerships, including offtake arrangements,
may expose us to risks.
We have entered into offtake
agreements related to our Elk Creek Project, and may enter into joint ventures or partnership arrangements, including additional
offtake agreements, with other parties in relation to the exploration, development, and production of certain of the properties
in which we have an interest. Any failure of such other companies to meet their obligations to us or to third parties, or any disputes
with respect to the parties’ respective rights and obligations, or price fluctuations and termination provisions related
to such agreements, could have a material adverse effect on us, the development and production at our properties, including the
Elk Creek Project, the joint ventures, if any, or their properties and therefore could have a material adverse effect on our results
of operations, financial performance, cash flows and the price of the Common Shares.
We may experience difficulty attracting and retaining qualified
management to meet the needs of our anticipated growth, and the failure to manage our growth effectively could have a material
adverse effect on our business and financial condition.
We are dependent on a
relatively small number of key employees, including our Chief Executive Officer. The loss of any officer could have an adverse
effect on us. We have no life insurance on any individual, and we may be unable to hire a suitable replacement for them on favorable
terms, should that become necessary.
It may be difficult to enforce judgments or bring actions
outside the United States against us and certain of our directors.
We are a Canadian corporation
and, as a result, it may be difficult or impossible for an investor to do the following:
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enforce in courts outside the United States judgments obtained in United States courts based upon
the civil liability provisions of United States federal securities laws against these persons and the Company; or
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bring in courts outside the United States an original action to enforce liabilities based upon
United States federal securities laws against these persons and the Company.
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Our results of operations could be affected by currency fluctuations.
Our properties are all
located in the United States and most costs associated with these properties are paid in U.S. dollars. There can be significant
swings in the exchange rate between the U.S. and Canadian dollar. There are no plans at this time to hedge against any exchange
rate fluctuations in currencies.
Title to our properties may be subject to other claims that
could affect our property rights and claims. Certain of our current leases with options to purchase need to be renewed and we cannot
guarantee that we will be successful in renewing those leases.
There are risks that title
to our properties may be challenged or impugned. Our current Elk Creek Project is located in Nebraska and may be subject to prior
unrecorded agreements or transfers or native land claims, and title may be affected by undetected defects. Our current leases give
us an option to purchase the property in order to conduct our anticipated mining claims, but the rights of the current owners to
sell the property subject to these options may be subject to prior unrecorded or unknown claims to title. We have investigated
our rights to explore and exploit the Elk Creek Project resource and, to the best of our knowledge, our rights in relation to lands
covering the Elk Creek Project resource are in good standing. However, there may be valid challenges to the title of our properties
that, if successful, could impair development and/or operations. Further, we are still in negotiations with certain landholders
regarding the renewal of leases with options to purchase regarding certain sections of property at our Elk Creek Project that have
expired. If we are unsuccessful in renewing these expired leases we may incur increases costs and difficulties in developing the
Elk Creek Project that could affect our results of operations and the value of our Common Shares.
We may be unable to secure surface access or purchase required
surface rights.
Although the Company acquires
the rights to some or all of the minerals in the ground subject to the mineral tenures that it acquires, or has a right to acquire,
in some cases it may not thereby acquire any rights to, or ownership of, the surface to the areas covered by such mineral tenures.
In such cases, applicable mining laws usually provide for rights of access to the surface for the purpose of carrying on mining
activities; however, the enforcement of such rights through the courts can be costly and time consuming. It is necessary to negotiate
surface access or to purchase the surface rights if long-term access is required. There can be no guarantee that, despite having
the right at law to access the surface and carry on mining activities, we will be able to negotiate satisfactory agreements with
any such existing landowners/occupiers for such access or purchase of such surface rights, and therefore we may be unable to carry
out planned mining activities. In addition, in circumstances where such access is denied, or no agreement can be reached, we may
need to rely on the assistance of local officials or the courts in such jurisdiction the outcomes of which cannot be predicted
with any certainty. Our inability to secure surface access or purchase required surface rights could materially and adversely affect
our timing, cost, or overall ability to develop any mineral deposits we may locate.
Our properties and operations may be subject to litigation
or other claims.
From time to time our
properties or operations may be subject to disputes that may result in litigation or other legal claims. We may be required to
assert or defend against these claims, which will divert resources and management time from operations. The costs of these claims
or adverse filings may have a material effect on our business and results of operations.
We do not currently insure against all the risks and hazards
of mineral exploration, development, and mining operations.
Exploration, development,
and mining operations involve various hazards, including environmental hazards, industrial accidents, metallurgical and other processing
problems, unusual or unexpected rock formations, structural cave-ins or slides, flooding, fires, and periodic interruptions due
to inclement or hazardous weather conditions. These risks could result in damage to or destruction of mineral properties, facilities,
or other property, personal injury, environmental damage, delays in operations, increased cost of operations, monetary losses,
and possible legal liability. We may not be able to obtain insurance to cover these risks at economically feasible premiums or
at all. We may elect not to insure where premium costs are disproportionate to our perception of the relevant risks. The payment
of such insurance premiums and of such liabilities would reduce the funds available for exploration and production activities.
Risk Related to Our Debt Securities
In the event of certain breaches with our Secured Creditors,
our assets may be affected.
We have, pursuant to the
Lind Agreement and in connection with the Smith Credit Agreement and Original Smith Loan (collectively, the “Current Smith
Loans”), granted security interests to Lind and Mark Smith (respectively, the “Secured Creditors”) over all of
the assets of the Company in consideration of the debt facilities provided by each Secured Creditor. In the event of certain breaches
of the Lind Agreement, and the terms of the Current Smith Loans, one or both of the Secured Creditors may be entitled to execute
on their security and seize or retain our assets, including the shares of 0896800 ECRC, as well as any assets of either subsidiary.
Certain rights of each of the Secured Parties to execute on their security are subject to notice and cure provisions in respect
of default by us; however any such exercise could materially damage our value and our ability to retain or progress development
of the Elk Creek Project.
The level of our indebtedness from time to time could impair
our ability to obtain additional financing.
From time to time we may
enter into transactions to acquire assets or the shares of other companies or to fund development of the Elk Creek Project. These
transactions may be financed partially or wholly with debt, which may increase our debt levels above industry standards. Our articles
do not limit the amount of indebtedness that we may incur. Our indebtedness could impair our ability to obtain additional financing
in the future on a timely basis to take advantage of business opportunities that may arise. Our ability to service our debt obligations
will depend on our future operations, which are subject to prevailing industry conditions and other factors, many of which are
beyond our control.
Risks Related to the Common Shares and Warrants
We believe that we may be a “passive foreign investment
company” for the current taxable year and for one or more future taxable years, which may result in materially adverse United
States federal income tax consequences for United States investors.
We generally will be designated as a “passive foreign investment
company” under the meaning of Section 1297 of the United States Internal Revenue Code of 1986, as amended (a “PFIC”)
if, for a tax year, (a) 75% or more of our gross income for such year is “passive income” (generally, dividends, interest,
rents, royalties, and gains from the disposition of assets producing passive income) or (b) if at least 50% or more of the value
of our assets produce, or are held for the production of, passive income, based on the quarterly average of the fair market value
of such assets. United States shareholders should be aware that we believe we were classified as a PFIC during our tax year ended
June 30, 2016, and based on current business plans and financial expectations, believe that we may be a PFIC for the current and
one or more future taxable years. If we are a PFIC for any taxable year during a U.S. shareholder’s holding period, then
such U.S. shareholder generally will be required to treat any gain realized upon a disposition of Common Shares or Warrants, or
any “excess distribution” received on its Common Shares, as ordinary income, and to pay an interest charge on a portion
of such gain or distribution. These consequences will be mitigated with respect to the Common Shares, but not the Warrants, if
the shareholder makes a timely and effective “qualified electing fund” or “QEF” election or a “mark-to-market”
election with respect to the Common Shares. A U.S. shareholder who makes a QEF election generally must include in income on a current
basis for U.S. federal income tax purposes its share of our net capital gain and ordinary earnings for any taxable year in which
we are a PFIC, whether or not we distribute any amount to our shareholders. A U.S. shareholder who makes a mark-to-market election
generally must include as ordinary income each year the excess of the fair market value of the Common Shares over the taxpayer’s
basis therein. This paragraph is qualified in its entirety by the discussion below under the heading “Certain United States
Federal Income Tax Considerations.” Each U.S. shareholder should consult its own tax advisors regarding the PFIC rules and
the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares and Warrants.
Our share price may be volatile and as a result you could
lose all or part of your investment.
In addition to volatility
associated with equity securities in general, the value of your investment could decline due to the impact of any of the following
factors upon the market price of the Common Shares:
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Disappointing results from our exploration efforts;
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Decline in demand for Common Shares;
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Downward revisions in securities analysts’ estimates or changes in general market conditions;
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Technological innovations by competitors or in competing technologies;
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Investor perception of our industry or our prospects; and
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General economic trends.
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In the past fiscal year,
the price of our stock on the TSX has ranged from a low of C$0.60 to a high of C$0.99
. In addition, stock markets
in general have experienced extreme price and volume fluctuations, and the market prices of securities have been highly volatile.
These fluctuations are often unrelated to operating performance and may adversely affect the market price of the Common Shares.
As a result, you may be unable to sell any Common Shares you acquire at a desired price.
Holders of the Warrants will have no rights as shareholders
until such holders exercise their Warrants and acquire our common shares.
Until holders of Warrants acquire common shares upon exercise
of the Warrants, holders of Warrants will have no rights with respect to the common shares underlying such Warrants. Upon exercise
of the Warrants, the holders thereof will be entitled to exercise the rights of common shareholders only as to matters for which
the record date occurs after the exercise date.
We have never paid dividends on the Common Shares.
We have not paid dividends
on the Common Shares to date, and we may not be in a position to pay dividends for the foreseeable future. Our ability to pay dividends
with respect to the Common Shares will depend on our ability to successfully develop one or more properties and generate earnings
from operations. Further, our initial earnings, if any, will likely be retained to finance our operations. Any future dividends
on Common Shares will depend upon our earnings, our then-existing financial requirements, and other factors, and will be at the
discretion of the Board.
Investors’ interests in our Company will be diluted
and investors may suffer dilution in their net book value per Common Share if we issue additional employee/Director/consultant
options or if we sell additional Common Shares to finance our operations.
In order to further expand
the Company’s operations and meet our objectives, any additional growth and/or expanded exploration activity will likely
need to be financed through sale of and issuance of additional Common Shares, including, but not limited to, raising funds to explore
the Elk Creek Project. Furthermore, to finance any acquisition activity, should that activity be properly approved, and depending
on the outcome of our exploration programs, we likely will also need to issue additional Common Shares to finance future acquisitions,
growth, and/or additional exploration programs of any or all of our projects or to acquire additional properties. We will also
in the future grant to some or all of our Directors, officers, and key employees and/or consultants options to purchase Common
Shares as non-cash incentives. The issuance of any equity securities could, and the issuance of any additional Common Shares will,
cause our existing shareholders to experience dilution of their ownership interests.
If we issue additional
Common Shares or decide to enter into joint ventures with other parties in order to raise financing through the sale of equity
securities, investors’ interests in the Company will be diluted and investors may suffer dilution in their net book value
per Common Share depending on the price at which such securities are sold.
We are subject to the continued listing criteria of the TSX
and our failure to satisfy these criteria may result in delisting of the Common Shares.
The Common Shares are
currently listed on the TSX. In order to maintain the listing, we must maintain certain financial and share distribution targets,
including maintaining a minimum number of public shareholders. In addition to objective standards, the TSX may delist the securities
of any issuer if, in the TSX’s opinion, the issuer’s financial condition and/or operating results appear unsatisfactory;
if it appears that the extent of public distribution or the aggregate market value of the security has become so reduced as to
make continued listing on the TSX inadvisable; if the issuer sells or disposes of principal operating assets or ceases to be an
operating company; if an issuer fails to comply with the listing requirements of TSX; or if any other event occurs or any condition
exists which makes continued listing on the TSX, in the opinion of the TSX, inadvisable.
If the TSX delists the
Common Shares, investors may face material adverse consequences, including, but not limited to, a lack of trading market for the
Common Shares, reduced liquidity, decreased analyst coverage of the Company, and an inability for us to obtain additional financing
to fund our operations.
The issuance of additional Common Shares may negatively impact
the trading price of our securities.
We have issued Common
Shares in the past and will continue to issue Common Shares to finance our activities in the future. In addition, outstanding options,
warrants, and broker warrants to purchase Common Shares may be exercised, resulting in the issuance of additional Common Shares.
The issuance by us of additional Common Shares would result in dilution to our shareholders, and even the perception that such
an issuance may occur could have a negative impact on the trading price of the Common Shares.
We are an “emerging growth company”, and we cannot
be certain if the reduced reporting requirements applicable to emerging growth companies will make our Common Shares less attractive
to investors.
We are an “emerging
growth company”, as defined in the Jumpstart Our Business Startups Act, or the JOBS Act. For as long as we continue to be
an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other
public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports
and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and
shareholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to
five years, although circumstances could cause us to lose that status earlier, including if the market value of our Common Shares
held by non-affiliates exceeds $700 million as of any December 31 before that time, in which case we would no longer be an emerging
growth company as of the following June 30. We cannot predict if investors will find our Common Shares less attractive because
we may rely on these exemptions. If some investors find our Common Shares less attractive as a result, there may be a less active
trading market for our Common Shares and our stock price may be more volatile. Under the JOBS Act, emerging growth companies can
also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have
irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, will be subject
to the same new or revised accounting standards as other public companies that are not emerging growth companies.
Broker-dealers may be discouraged from effecting transactions
in Common Shares because they are considered a penny stock and are subject to the penny stock rules.
Our Common Shares are
currently considered a “penny stock”. The SEC has adopted Rule 15g-9 which generally defines “penny stock”
to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00
per share, subject to certain exceptions. The Common Shares are covered by the penny stock rules, which impose additional sales
practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”.
The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals
with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized
risk disclosure document in a form prepared by the SEC, which provides information about penny stocks and the nature and level
of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for
the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing
the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer
and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules
require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special
written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written
agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the
secondary market for the Common Shares. Consequently, these penny stock rules may affect the ability of broker-dealers to trade
in the Common Shares.
Cautionary
Note Regarding Forward-Looking Statements
The information discussed
in this prospectus includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act. All statements, other than statements of historical facts, included herein concerning, among other
things, planned capital expenditures, future cash flows and borrowings, pursuit of potential acquisition opportunities, our financial
position, business strategy and other plans and objectives for future operations, future exploration activities, future mineral
resource estimates, and future joint venture arrangements are forward-looking statements. These forward-looking statements are
identified by their use of terms and phrases such as “may”, “expect”, “estimate”, “project”,
“plan”, “believe”, “intend”, “achievable”, “anticipate”, “will”,
“continue”, “potential”, “should”, “could”, and similar terms and phrases.
Any statements that express
or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, or future
events or performance (often, but not always, using words or phrases such as “expects” or “does not expect”,
“is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates”
or “intends”, or stating that certain actions, events or results “may”, “could”, “would”,
“might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking
statements. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that
could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without
limitation:
|
·
|
risks related to our ability to operate as a going concern;
|
|
·
|
risks related to our requirement of significant additional capital;
|
|
·
|
risks related to our limited operating history;
|
|
·
|
risks related to our history of losses;
|
|
·
|
risks related to cost increases for our exploration and, if warranted, development projects;
|
|
·
|
risks related to our properties being in the exploration stage;
|
|
·
|
risks related to feasibility study results and preliminary
economic assessment estimates;
|
|
·
|
risks related to the determination of the economic
viability of a deposit;
|
|
·
|
risks related to mineral exploration and production activities;
|
|
·
|
risks related to our lack of mineral production from our properties;
|
|
·
|
risks related to the results of our metallurgical
testing;
|
|
·
|
risks related to the price volatility of commodities;
|
|
·
|
risks related to estimates of mineral resources;
|
|
·
|
risks related to changes in mineral resource estimates;
|
|
·
|
risks related to differences in United States and Canadian reserve and resource reporting;
|
|
·
|
risks related to our exploration activities being unsuccessful;
|
|
·
|
risks related to our ability to obtain permits and licenses for production;
|
|
·
|
risks related to government and environmental regulations that may increase our costs of doing
business or restrict our operations;
|
|
·
|
risks related to proposed legislation that may significantly affect the mining industry;
|
|
·
|
risks related to land reclamation requirements;
|
|
·
|
risks related to competition in the mining industry;
|
|
·
|
risks related to the difficulties of handling the
disposal of mine water at our Elk Creek Project;
|
|
·
|
risks related to equipment and supply shortages;
|
|
·
|
risks related to current and future joint ventures and partnerships;
|
|
·
|
risks related to our ability to attract qualified management;
|
|
·
|
risks related to the ability to enforce judgment against certain of our Directors;
|
|
·
|
risks related to currency fluctuations;
|
|
·
|
risks related to claims on the title to our properties;
|
|
·
|
risks related to surface access on our properties;
|
|
·
|
risks related to potential future litigation;
|
|
·
|
risks related to our lack of insurance covering all our operations;
|
|
·
|
risks related to covenants contained in agreements
with our secured creditors that may affect our assets;
|
|
·
|
risks related to the extent to which our level of
indebtedness may impair our ability to obtain additional financing;
|
|
·
|
risks related to our status as a “passive foreign investment company” under US federal
tax code;
|
|
·
|
risks related to the Common Shares, including price volatility, lack of dividend payments, dilution
and penny stock rules; and
|
|
·
|
risks related to our debt.
|
This list is not exhaustive
of the factors that may affect our forward-looking statements. Some of the important risks and uncertainties that could affect
forward-looking statements are described further under “Risk Factors” in this prospectus. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those
anticipated, believed, estimated, or expected. We caution readers not to place undue reliance on any such forward-looking statements,
which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect
events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events,
except as required by law.
Use
of Proceeds
This
prospectus relates to the sale or other disposition of our Common Shares and Warrants by the selling shareholders listed
under “Selling Shareholders” section below, and their transferees. We will not receive any proceeds from the
resale of the Common Shares or the Warrants by the selling shareholders. However, upon exercise we will receive the cash
exercise price of the Warrants and will use the proceeds, if any, for general corporate purposes.
Selling
Shareholders
This prospectus covers
an aggregate of 7,307,105 Common Shares, comprised of (i) 3,538,550 Common Shares issued to selling shareholders in connection
with the Private Placement; (ii) up to 3,538,550 Common Shares issuable upon exercise of the Selling Shareholder Warrants; and
(iii) up to 230,005 Common Shares issuable upon exercise of the Compensation Warrants. This prospectus also covers the resale
of (i) 3,538,550 Selling Shareholder Warrants and (ii) 230,005 Compensation Warrants.
Selling shareholders
are persons or entities that, directly or indirectly, have acquired Common Shares and Warrants in the Private Placement as of
the Closing Date, or will acquire Common Shares from us from time to time upon exercise of the Warrants. This prospectus and any
prospectus supplement will only permit the selling shareholders to sell the Common Shares and Warrants identified in the
“Number of Common Shares Offered Hereby” column or “Number of Warrants Offered Hereby”
column, respectively.
The selling shareholders
may from time to time offer and sell the Common Shares or Warrants pursuant to this prospectus and any applicable prospectus supplement.
The selling shareholders may offer all or some portion of the Common Shares or Warrants they hold or acquire, but only Common Shares
and Warrants that are currently outstanding or Common Shares that are acquired upon the exercise of the Warrants, and in either
case included in the “Number of Common Shares Offered Hereby” column or “Number of Warrants Offered Hereby”
column, respectively, may be sold pursuant to this prospectus or any applicable prospectus supplement.
The Common Shares
and Warrants issued to the selling shareholders are “restricted” shares under applicable federal and state
securities laws and are being registered to give the selling shareholders the opportunity to sell their Common Shares and
Warrants. The registration of such Common Shares and Warrants does not necessarily mean, however, that any of these Common
Shares or Warrants will be offered or sold by the selling shareholders. The selling shareholders may from time to time offer
and sell all or a portion of their Common Shares or Warrants in the over-the-counter market, in negotiated transactions,
or otherwise, at market prices prevailing at the time of sale or at negotiated prices.
The
registered Common Shares and Warrants may be sold directly or through brokers or dealers, or in a distribution by one or more
underwriters on a firm commitment or best efforts basis. To the extent required, the names of any agent or broker-dealer and
applicable commissions or discounts and any other required information with respect to any particular offer will be set forth
in an accompanying prospectus supplement. See “Plan of Distribution”.
Each of the selling
shareholders reserves the sole right to accept or reject, in whole or in part, any proposed purchase of the registered Common
Shares or Warrants to be made directly or through agents. To the extent that any of the selling shareholders are acting as
brokers or dealers with respect to the securities being offered hereby, they may be deemed to be “underwriters”
within the meaning of the Securities Act and any commissions received by them and any profit on the resale of the registered
securities may be deemed to be underwriting commissions or discounts under the Securities Act. As of the date of this
prospectus, based on the representations received by the Company from the selling shareholders, none of the selling
shareholders are registered brokers or dealers or affiliated with registered brokers or dealers. Mackie received the Common
Shares and Compensation Warrants being offered pursuant to this prospectus as compensation for services rendered as the
underwriter in the Private Placement.
The following table sets
forth the name of persons who are offering the resale of Common Shares and Warrants by this prospectus, the number of Common Shares
and Warrants beneficially owned by each person, the number of Common Shares and Warrants that may be sold in this offering and
the number of Common Shares and Warrants each person will own after the offering, assuming they sell all of the Common Shares and
Warrants offered. The information appearing in the table below is based on information provided by or on behalf of the named selling
shareholders. We will not receive any proceeds from the resale of the Common Shares by the selling shareholders. However, upon
exercise we will receive the cash exercise price of the Warrants.
|
|
|
|
|
|
|
|
|
|
|
Securities Beneficially Owned After this Offering
|
|
Name of Selling
Securityholder (1)
|
|
Number of
Shares
Beneficially
Owned Prior
to this
Offering
|
|
|
Number of
Commons
Shares
Hereby
Offered (2)
|
|
|
Number of
Warrants
Offered
|
|
|
Number
of Shares
|
|
|
% of
Outstanding
Shares
|
|
|
Number of
Warrants
|
|
|
% of
Outstanding
Warrants
|
|
Catherine Wright (3)
|
|
|
0
|
|
|
|
44,000
|
|
|
|
22,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Mary Donna Adams (4)
|
|
|
0
|
|
|
|
28,000
|
|
|
|
14,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Tracy Stratford (5)
|
|
|
0
|
|
|
|
50,000
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Valerie Grosvold (6)
|
|
|
0
|
|
|
|
24,000
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Barbara Scott (7)
|
|
|
0
|
|
|
|
20,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Kathryn Ronson (8)
|
|
|
0
|
|
|
|
24,000
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Robert Ronson (9)
|
|
|
0
|
|
|
|
24,000
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Donna Kings (10)
|
|
|
0
|
|
|
|
34,000
|
|
|
|
17,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Darryl Michael Konkiewicz (11)
|
|
|
0
|
|
|
|
48,400
|
|
|
|
24,200
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
David Hardie (12)
|
|
|
0
|
|
|
|
16,000
|
|
|
|
8,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
John L Cook (13)
|
|
|
0
|
|
|
|
30,000
|
|
|
|
15,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Edward Ivan Martin (14)
|
|
|
0
|
|
|
|
30,000
|
|
|
|
15,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Jean L Hawke (15)
|
|
|
0
|
|
|
|
19,000
|
|
|
|
9,500
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Charles Maclean (16)
|
|
|
0
|
|
|
|
22,000
|
|
|
|
11,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Suzanne Martin Shostal (17)
|
|
|
0
|
|
|
|
16,000
|
|
|
|
8,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Donald S. Fort (18)
|
|
|
0
|
|
|
|
12,600
|
|
|
|
6,300
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Michael Rzepczyk (19)
|
|
|
0
|
|
|
|
29,400
|
|
|
|
14,700
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Marsha D. Alway (20)
|
|
|
0
|
|
|
|
23,000
|
|
|
|
11,500
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
David Bowers (21)
|
|
|
0
|
|
|
|
24,000
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Karen R. Jaskiewiez (22)
|
|
|
0
|
|
|
|
24,000
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Jody and Deborah Dahrouge (23)
|
|
|
0
|
|
|
|
130,000
|
|
|
|
65,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Fevzi Ogelman (24)
|
|
|
0
|
|
|
|
130,000
|
|
|
|
65,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Kevin E King (25)
|
|
|
0
|
|
|
|
10,000
|
|
|
|
5,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Ronald Fox (26)
|
|
|
0
|
|
|
|
16,000
|
|
|
|
8,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Vernon Smith (27)
|
|
|
0
|
|
|
|
19,000
|
|
|
|
9,500
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Kimberly May Thompson (28)
|
|
|
0
|
|
|
|
30,000
|
|
|
|
15,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Brenda Powers (29)
|
|
|
0
|
|
|
|
21,000
|
|
|
|
10,500
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Guy Henry Shoemaker (30)
|
|
|
0
|
|
|
|
48,500
|
|
|
|
24,250
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
David C Takach (31)
|
|
|
0
|
|
|
|
24,000
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Wesley Mik (32)
|
|
|
0
|
|
|
|
24,000
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Lawrence W. Pickard (33)
|
|
|
0
|
|
|
|
13,500
|
|
|
|
6,750
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Charlene Vanhooren (34)
|
|
|
0
|
|
|
|
39,600
|
|
|
|
19,800
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Larry L. Morden (35)
|
|
|
0
|
|
|
|
32,000
|
|
|
|
16,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Marva Usher (36)
|
|
|
0
|
|
|
|
61,400
|
|
|
|
30,700
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Sarah McGill Disher-Neddow (37)
|
|
|
0
|
|
|
|
24,000
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Wendy Anne Gauthier (38)
|
|
|
0
|
|
|
|
16,800
|
|
|
|
8,400
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Gord Murray Fleming (39)
|
|
|
0
|
|
|
|
32,000
|
|
|
|
16,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Brad Sinclair (40)
|
|
|
0
|
|
|
|
49,000
|
|
|
|
24,500
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Matthew Riordan (41)
|
|
|
0
|
|
|
|
16,800
|
|
|
|
8,400
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
John W. Ronson (42)
|
|
|
0
|
|
|
|
15,400
|
|
|
|
7,700
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
E. Louise McGraw (43)
|
|
|
0
|
|
|
|
28,000
|
|
|
|
14,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Cindy Stephanie MacDonald (44)
|
|
|
0
|
|
|
|
30,800
|
|
|
|
15,400
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Thomas F. Hart (45)
|
|
|
0
|
|
|
|
31,000
|
|
|
|
15,500
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Beneficially Owned After this Offering
|
|
Name of Selling
Securityholder (1)
|
|
Number of
Shares
Beneficially
Owned Prior
to this
Offering
|
|
|
Number of
Commons
Shares
Hereby
Offered (2)
|
|
|
Number of
Warrants
Offered
|
|
|
Number
of Shares
|
|
|
% of
Outstanding
Shares
|
|
|
Number of
Warrants
|
|
|
% of
Outstanding
Warrants
|
|
Adrian Christilaw (46)
|
|
|
0
|
|
|
|
47,100
|
|
|
|
23,550
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Brenda Wilkinson (47)
|
|
|
0
|
|
|
|
30,700
|
|
|
|
15,350
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Paul Petersen (48)
|
|
|
0
|
|
|
|
29,200
|
|
|
|
14,600
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Courtland Peterson (49)
|
|
|
0
|
|
|
|
15,400
|
|
|
|
7,700
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Patricia Jean Lovelock (50)
|
|
|
0
|
|
|
|
23,000
|
|
|
|
11,500
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Debra Petersen (51)
|
|
|
0
|
|
|
|
34,600
|
|
|
|
17,300
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Mary De St. Croix (52)
|
|
|
0
|
|
|
|
21,000
|
|
|
|
10,500
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
N. Ross De St. Croix (53)
|
|
|
0
|
|
|
|
21,000
|
|
|
|
10,500
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Jeff Woodcock (54)
|
|
|
0
|
|
|
|
24,000
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Colin Wallace (55)
|
|
|
0
|
|
|
|
13,500
|
|
|
|
6,750
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Paula J Sinclair (56)
|
|
|
0
|
|
|
|
32,000
|
|
|
|
16,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Ralph Usher (57)
|
|
|
0
|
|
|
|
66,000
|
|
|
|
33,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Marianna Elizabeth Smith (58)
|
|
|
0
|
|
|
|
27,000
|
|
|
|
13,500
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Murray Cameron Smith (59)
|
|
|
0
|
|
|
|
24,000
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Ryan Brown (60)
|
|
|
0
|
|
|
|
48,000
|
|
|
|
24,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
R. Dean Gommier (61)
|
|
|
0
|
|
|
|
17,000
|
|
|
|
8,500
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Audrey Mae Gommier (62)
|
|
|
0
|
|
|
|
12,000
|
|
|
|
6,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Bohdan J. Wynnyk (63)
|
|
|
0
|
|
|
|
20,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Tessa J. Kane (64)
|
|
|
0
|
|
|
|
70,000
|
|
|
|
35,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
William Kennedy (65)
|
|
|
0
|
|
|
|
22,000
|
|
|
|
11,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Calvin Bruce Hawke (66)
|
|
|
0
|
|
|
|
24,000
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Craig Jacques (67)
|
|
|
0
|
|
|
|
22,000
|
|
|
|
11,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Eugene O'Brien (68)
|
|
|
0
|
|
|
|
16,000
|
|
|
|
8,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Babette Howell (69)
|
|
|
0
|
|
|
|
16,000
|
|
|
|
8,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Ben Depew and Nancy Depew (70)
|
|
|
0
|
|
|
|
60,000
|
|
|
|
30,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Linda Hazel Hodder (71)
|
|
|
0
|
|
|
|
20,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Mark Ferguson (72)
|
|
|
0
|
|
|
|
22,000
|
|
|
|
11,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Lynn Marie Medve-Jones (73)
|
|
|
0
|
|
|
|
22,000
|
|
|
|
11,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Joanne Bourne (74)
|
|
|
0
|
|
|
|
23,000
|
|
|
|
11,500
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Harry Fox (75)
|
|
|
0
|
|
|
|
15,400
|
|
|
|
7,700
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Heidi E. Petersen (76)
|
|
|
0
|
|
|
|
21,000
|
|
|
|
10,500
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Karen E. Watts (77)
|
|
|
0
|
|
|
|
15,400
|
|
|
|
7,700
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
David Graham Rutherford (78)
|
|
|
0
|
|
|
|
24,000
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Chad T. Smith (79)
|
|
|
0
|
|
|
|
24,000
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Dennis E. Walton (80)
|
|
|
0
|
|
|
|
16,000
|
|
|
|
8,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Cynthia Walton (81)
|
|
|
0
|
|
|
|
14,400
|
|
|
|
7,200
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Beverly Jane MacDonald (82)
|
|
|
0
|
|
|
|
15,000
|
|
|
|
7,500
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Sherry Reed (83)
|
|
|
0
|
|
|
|
16,000
|
|
|
|
8,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Guy W. Heaslip (84)
|
|
|
0
|
|
|
|
16,000
|
|
|
|
8,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Marilyn L. Shaver (85)
|
|
|
0
|
|
|
|
22,000
|
|
|
|
11,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
John D. Reed (86)
|
|
|
0
|
|
|
|
14,600
|
|
|
|
7,300
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Kathleen Vandyk (87)
|
|
|
0
|
|
|
|
27,000
|
|
|
|
13,500
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Kim Portelli (88)
|
|
|
0
|
|
|
|
22,000
|
|
|
|
11,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Kandice VanSickle (89)
|
|
|
0
|
|
|
|
22,000
|
|
|
|
11,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Patrick Joseph Dietrich (90)
|
|
|
0
|
|
|
|
7,100
|
|
|
|
3,550
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Marilyn Yvonne Sevenpifer (91)
|
|
|
0
|
|
|
|
100,000
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Beneficially Owned After this Offering
|
|
Name of Selling
Securityholder (1)
|
|
Number of
Shares
Beneficially
Owned Prior
to this
Offering
|
|
|
Number of
Commons
Shares
Hereby
Offered (2)
|
|
|
Number of
Warrants
Offered
|
|
|
Number
of Shares
|
|
|
% of
Outstanding
Shares
|
|
|
Number of
Warrants
|
|
|
% of
Outstanding
Warrants
|
|
William N. Clarridge (92)
|
|
|
0
|
|
|
|
28,000
|
|
|
|
14,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Vito Tuori (93)
|
|
|
0
|
|
|
|
16,000
|
|
|
|
8,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Terry Lynn Cook (94)
|
|
|
0
|
|
|
|
8,000
|
|
|
|
4,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Michael Bruce Wannop (95)
|
|
|
0
|
|
|
|
36,400
|
|
|
|
18,200
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Donna Marie Stewart (96)
|
|
|
0
|
|
|
|
15,400
|
|
|
|
7,700
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Mark Lundgren (97)
|
|
|
0
|
|
|
|
24,000
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
John Wyatt (98)
|
|
|
0
|
|
|
|
24,000
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Simone Camilla Clark (99)
|
|
|
0
|
|
|
|
32,400
|
|
|
|
16,200
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Heather Wyatt (100)
|
|
|
0
|
|
|
|
30,000
|
|
|
|
15,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Michael Aasla (101)
|
|
|
0
|
|
|
|
6,000
|
|
|
|
3,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
John M. Howell (102)
|
|
|
35,000
|
|
|
|
11,000
|
|
|
|
5,500
|
|
|
|
35,000
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Randy Wilson (103)
|
|
|
0
|
|
|
|
57,000
|
|
|
|
28,500
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Gloria Christilaw (104)
|
|
|
378,850
|
|
|
|
22,000
|
|
|
|
11,000
|
|
|
|
378,850
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Paul T. Shimoda (105)
|
|
|
0
|
|
|
|
28,000
|
|
|
|
14,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Joan Prout (106)
|
|
|
0
|
|
|
|
20,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Sarah Christilaw (107)
|
|
|
0
|
|
|
|
173,100
|
|
|
|
86,550
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Jeffrey Stuart Depew (108)
|
|
|
0
|
|
|
|
14,000
|
|
|
|
7,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Maria Elizabeth Moore (109)
|
|
|
260,000
|
|
|
|
60,000
|
|
|
|
30,000
|
|
|
|
260,000
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Cameron MacDonald (110)
|
|
|
0
|
|
|
|
21,000
|
|
|
|
10,500
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Deborah Sokol-MacDonald (111)
|
|
|
0
|
|
|
|
16,000
|
|
|
|
8,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Michael Bruce Wannop and Wendy C Spiegelberg (112)
|
|
|
640,000
|
|
|
|
63,000
|
|
|
|
31,500
|
|
|
|
640,000
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Wendy C. Spiegelberg (113)
|
|
|
0
|
|
|
|
15,400
|
|
|
|
7,700
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Robert Coggins (114)
|
|
|
0
|
|
|
|
24,000
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Lorraine A. Gavloski (115)
|
|
|
0
|
|
|
|
16,000
|
|
|
|
8,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Donna Walker (116)
|
|
|
0
|
|
|
|
21,000
|
|
|
|
10,500
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
David J. Walker (117)
|
|
|
0
|
|
|
|
4,000
|
|
|
|
2,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
John A Closs (118)
|
|
|
0
|
|
|
|
24,000
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Rose Huysentruyt-Closs (119)
|
|
|
0
|
|
|
|
24,000
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
David Powers (120)
|
|
|
0
|
|
|
|
21,000
|
|
|
|
10,500
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Howard Louie (121)
|
|
|
0
|
|
|
|
50,000
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Hong (Iris) Duan (122)
|
|
|
0
|
|
|
|
30,000
|
|
|
|
15,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Ping Shen (123)
|
|
|
0
|
|
|
|
200,000
|
|
|
|
100,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Philip Gravelle (124)
|
|
|
13,500
|
|
|
|
27,000
|
|
|
|
13,500
|
|
|
|
13,500
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Morgan Rock (125)
|
|
|
13,500
|
|
|
|
27,000
|
|
|
|
13,500
|
|
|
|
13,500
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Rudy Yanick (126)
|
|
|
0
|
|
|
|
41,000
|
|
|
|
20,500
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Ron Birch (127)
|
|
|
0
|
|
|
|
60,000
|
|
|
|
30,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Chih Chun Wu (128)
|
|
|
0
|
|
|
|
110,000
|
|
|
|
55,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Muthupalaniappan Kalairajah (129)
|
|
|
0
|
|
|
|
40,000
|
|
|
|
20,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Donald F Firth (130)
|
|
|
0
|
|
|
|
40,000
|
|
|
|
20,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Ramona Vorberg (131)
|
|
|
0
|
|
|
|
113,100
|
|
|
|
56,550
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
2379388 Ontario Ltd. (132)
|
|
|
80,000
|
|
|
|
90,000
|
|
|
|
45,000
|
|
|
|
80,000
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Orca Capital GmbH (133)
|
|
|
0
|
|
|
|
600,000
|
|
|
|
300,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Uber Strategies LP (134)
|
|
|
0
|
|
|
|
230,600
|
|
|
|
115,300
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Confederation Capital Corp (135)
|
|
|
0
|
|
|
|
50,000
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
9642218 Canada Inc (136)
|
|
|
0
|
|
|
|
1,000,000
|
|
|
|
500,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Beneficially Owned After this Offering
|
|
Name of Selling
Securityholder (1)
|
|
Number of
Shares
Beneficially
Owned Prior
to this
Offering
|
|
|
Number of
Commons
Shares
Hereby
Offered (2)
|
|
|
Number of
Warrants
Offered
|
|
|
Number
of Shares
|
|
|
% of
Outstanding
Shares
|
|
|
Number of
Warrants
|
|
|
% of
Outstanding
Warrants
|
|
Weber Investment Corporation (137)
|
|
|
476,643
|
|
|
|
111,300
|
|
|
|
55,650
|
|
|
|
476,643
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
2506764 Ontario Inc (138)
|
|
|
0
|
|
|
|
54,000
|
|
|
|
27,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
1486618 Ontario Inc (139)
|
|
|
0
|
|
|
|
30,800
|
|
|
|
15,400
|
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
1589936 Ontario Inc (140)
|
|
|
285,000
|
|
|
|
77,000
|
|
|
|
38,500
|
|
|
|
285,000
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
David Christilaw (141)
|
|
|
378,850
|
|
|
|
88,000
|
|
|
|
44,000
|
|
|
|
378,850
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Adam Christilaw (142)
|
|
|
205,431
|
|
|
|
71,400
|
|
|
|
35,700
|
|
|
|
205,431
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Hayley Christilaw (143)
|
|
|
171,788
|
|
|
|
13,400
|
|
|
|
6,700
|
|
|
|
171,788
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Adam Christilaw and/or Hayley Christilaw (144)
|
|
|
227,591
|
|
|
|
68,200
|
|
|
|
34,100
|
|
|
|
227,591
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Mackie Research Capital Corporation (145)
|
|
|
243,360
|
|
|
|
230,005
|
|
|
|
230,005
|
|
|
|
243,360
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Anson Investments Master Fund LP (146)
|
|
|
285,714
|
|
|
|
400,000
|
|
|
|
200,000
|
|
|
|
285,714
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Total
|
|
|
3,695,227
|
|
|
|
7,307,105
|
|
|
|
3,768,555
|
|
|
|
3,695,227
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
|
(1)
|
This table is based upon information supplied by the selling shareholders, which information may
not be accurate as of the date hereof. We have determined beneficial ownership in accordance with the rules of the SEC. Except
as indicated by the footnotes below, we believe, based on the information furnished to us, that the selling shareholders named
in the table above have sole voting and investment power with respect to all shares of common stock that they beneficially own,
subject to applicable community property laws. Applicable percentages for the Common Shares are based on 197,819,163 Common Shares
outstanding on June 1, 2017, adjusted as required by rules promulgated by the SEC. Applicable percentages for the Selling Shareholder
Warrants and the Compensation Warrants are based on 3,538,550 Selling Shareholder Warrants and 230,005 Compensation Warrants outstanding
as of the Closing Date.
|
|
(2)
|
Includes Common Shares issuable upon exercise of the Selling Shareholder Warrants.
|
|
(3)
|
Catherine Wright has voting and investment power over the Common Shares and the Warrants.
The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 22,000 Common Shares, 22,000 Selling
Shareholder Warrants, and 22,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is
offering pursuant to this prospectus, 22,000 Common Shares, 22,000 Selling Shareholder Warrants and 22,000 Common Shares
acquirable
upon exercise
of
Selling Shareholder Warrants.
|
|
(4)
|
Mary Donna Adams has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 14,000 Common Shares, 14,000 Selling Shareholder Warrants,
and 14,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 14,000 Common Shares, 14,000 Selling Shareholder Warrants, and 14,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(5)
|
Tracy Stratford has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 25,000 Common Shares, 25,000 Selling Shareholder Warrants,
and 25,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 25,000 Common Shares, 25,000 Selling Shareholder Warrants, and 25,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(6)
|
Valerie Grosvold has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 12,000 Common Shares, 12,000 Selling Shareholder Warrants,
and 12,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 12,000 Common Shares, 12,000 Selling Shareholder Warrants, and 12,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(7)
|
Barbara Scott has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 10,000 Common Shares, 10,000 Selling Shareholder Warrants,
and 10,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 10,000 Common Shares, 10,000 Selling Shareholder Warrants, and 10,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(8)
|
Kathryn Ronson has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 12,000 Common Shares, 12,000 Selling Shareholder Warrants,
and 12,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 12,000 Common Shares, 12,000 Selling Shareholder Warrants, and 12,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(9)
|
Robert Ronson has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 12,000 Common Shares, 12,000 Selling Shareholder Warrants,
and 12,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 12,000 Common Shares, 12,000 Selling Shareholder Warrants, and 12,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(10)
|
Donna Kings has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 17,000 Common Shares, 17,000 Selling Shareholder Warrants,
and 17,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 17,000 Common Shares, 17,000 Selling Shareholder Warrants, and 17,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(11)
|
Darryl Michael Konkiewicz has voting and investment power over the Common Shares and the Warrants.
The jurisdiction of the selling security holder is Canada. Beneficial ownership includes 24,200 Common Shares, 24,200 Selling Shareholder
Warrants, and 24,200 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 24,200 Common Shares, 24,200 Selling Shareholder Warrants, and 24,200 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
|
|
(12)
|
David Hardie has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 8,000 Common Shares, 8,000 Selling Shareholder Warrants,
and 8,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 8,000 Common Shares, 8,000 Selling Shareholder Warrants, and 8,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(13)
|
John L Cook has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 15,000 Common Shares, 15,000 Selling Shareholder Warrants,
and 15,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 15,000 Common Shares, 15,000 Selling Shareholder Warrants, and 15,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(14)
|
Edward Ivan Martin has voting and investment power over the Common Shares and the Warrants.
The jurisdiction of the selling security holder is Canada. Beneficial ownership includes 15,000 Common Shares, 15,000 Selling
Shareholder Warrants, and 15,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is
offering pursuant to this prospectus, 15,000 Common Shares, 15,000 Selling Shareholder Warrants, and 15,000 Common Shares
acquirable upon exercise of Selling Shareholder Warrants. Edward Ivan Martin may be deemed to be a beneficial owner of the
securities of the Company owned by 1589936 Ontario Inc. See footnote 140.
|
|
(15)
|
Jean L Hawke has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 9,500 Common Shares, 9,500 Selling Shareholder Warrants,
and 9,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 9,500 Common Shares, 9,500 Selling Shareholder Warrants, and 9,500 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(16)
|
Charles Maclean has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 11,000 Common Shares, 11,000 Selling Shareholder Warrants,
and 11,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 11,000 Common Shares, 11,000 Selling Shareholder Warrants, and 11,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(17)
|
Suzanne Martin Shostal has voting and investment power over the Common Shares and the Warrants.
The jurisdiction of the selling security holder is Canada. Beneficial ownership includes 8,000 Common Shares, 8,000 Selling Shareholder
Warrants, and 8,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 8,000 Common Shares, 8,000 Selling Shareholder Warrants, and 8,000 Common Shares acquirable upon exercise of
Selling Shareholder Warrants.
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(18)
|
Donald S. Fort has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 6,300 Common Shares, 6,300 Selling Shareholder Warrants,
and 6,300 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 6,300 Common Shares, 6,300 Selling Shareholder Warrants, and 6,300 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(19)
|
Michael Rzepczyk has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 14,700 Common Shares, 14,700 Selling Shareholder Warrants,
and 14,700 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 14,700 Common Shares, 14,700 Selling Shareholder Warrants, and 14,700 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(20)
|
Marsha D. Alway has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 11,500 Common Shares, 11,500 Selling Shareholder Warrants,
and 11,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 11,500 Common Shares, 11,500 Selling Shareholder Warrants, and 11,500 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(21)
|
David Bowers has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 12,000 Common Shares, 12,000 Selling Shareholder Warrants,
and 12,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 12,000 Common Shares, 12,000 Selling Shareholder Warrants, and 12,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(22)
|
Karen R. Jaskiewiez has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 12,000 Common Shares, 12,000 Selling Shareholder
Warrants, and 12,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 12,000 Common Shares, 12,000 Selling Shareholder Warrants, and 12,000 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
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(23)
|
Jody and Deborah Dahrouge have voting and investment power over the Common Shares and the
Warrants. The jurisdiction of the selling security holders is Canada. Beneficial ownership includes 65,000 Common Shares,
65,000 Selling Shareholder Warrants, and 65,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling
shareholders are offering pursuant to this prospectus, 65,000 Common Shares, 65,000 Selling Shareholder Warrants, and 65,000
Common Shares acquirable upon exercise of Selling Shareholder Warrants.
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(24)
|
Fevzi Ogelman has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 65,000 Common Shares, 65,000 Selling Shareholder Warrants,
and 65,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 65,000 Common Shares, 65,000 Selling Shareholder Warrants, and 65,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(25)
|
Kevin E King has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 5,000 Common Shares, 5,000 Selling Shareholder Warrants,
and 5,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 5,000 Common Shares, 5,000 Selling Shareholder Warrants, and 5,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(26)
|
Ronald Fox has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 8,000 Common Shares, 8,000 Selling Shareholder Warrants,
and 8,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 8,000 Common Shares, 8,000 Selling Shareholder Warrants, and 8,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(27)
|
Vernon Smith has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 9,500 Common Shares, 9,500 Selling Shareholder Warrants,
and 9,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 9,500 Common Shares, 9,500 Selling Shareholder Warrants, and 9,500 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(28)
|
Kimberly May Thompson has voting and investment power over the Common Shares and the Warrants.
The jurisdiction of the selling security holder is Canada. Beneficial ownership includes 15,000 Common Shares, 15,000 Selling Shareholder
Warrants, and 15,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 15,000 Common Shares, 15,000 Selling Shareholder Warrants, and 15,000 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
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(29)
|
Brenda Powers has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 10,500 Common Shares, 10,500 Selling Shareholder Warrants,
and 10,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 10,500 Common Shares, 10,500 Selling Shareholder Warrants, and 10,500 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(30)
|
Guy Henry Shoemaker has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 24,250 Common Shares, 24,250 Selling Shareholder
Warrants, and 24,250 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 24,250 Common Shares, 24,250 Selling Shareholder Warrants, and 24,250 Common Shares acquirable upon exercise of
Selling Shareholder Warrants.
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(31)
|
David C Takach has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 12,000 Common Shares, 12,000 Selling Shareholder Warrants,
and 12,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 12,000 Common Shares, 12,000 Selling Shareholder Warrants, and 12,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(32)
|
Wesley Mik has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 12,000 Common Shares, 12,000 Selling Shareholder Warrants,
and 12,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 12,000 Common Shares, 12,000 Selling Shareholder Warrants, and 12,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(33)
|
Lawrence W. Pickard has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 6,750 Common Shares, 6,750 Selling Shareholder
Warrants, and 6,750 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 6,750 Common Shares, 6,750 Selling Shareholder Warrants, and 6,750 Common Shares acquirable upon exercise of
Selling Shareholder Warrants.
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(34)
|
Charlene Vanhooren has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 19,800 Common Shares, 19,800 Selling Shareholder
Warrants, and 19,800 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 19,800 Common Shares, 19,800 Selling Shareholder Warrants, and 19,800 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
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(35)
|
Larry L. Morden has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 16,000 Common Shares, 16,000 Selling Shareholder Warrants,
and 16,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 16,000 Common Shares, 16,000 Selling Shareholder Warrants, and 16,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(36)
|
Marva Usher has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 30,700 Common Shares, 30,700 Selling Shareholder Warrants,
and 30,700 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 30,700 Common Shares, 30,700 Selling Shareholder Warrants, and 30,700 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(37)
|
Sarah McGill Disher-Neddow has voting and investment power over the Common Shares and the Warrants.
The jurisdiction of the selling security holder is Canada. Beneficial ownership includes 12,000 Common Shares, 12,000 Selling Shareholder
Warrants, and 12,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 12,000 Common Shares, 12,000 Selling Shareholder Warrants, and 12,000 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
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(38)
|
Wendy Anne Gauthier has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 8,400 Common Shares, 8,400 Selling Shareholder
Warrants, and 8,400 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 8,400 Common Shares, 8,400 Selling Shareholder Warrants, and 8,400 Common Shares acquirable upon exercise of
Selling Shareholder Warrants.
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(39)
|
Gord Murray Fleming has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 16,000 Common Shares, 16,000 Selling Shareholder
Warrants, and 16,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 16,000 Common Shares, 16,000 Selling Shareholder Warrants, and 16,000 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
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(40)
|
Brad Sinclair has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 24,500 Common Shares, 24,500 Selling Shareholder Warrants,
and 24,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 24,500 Common Shares, 24,500 Selling Shareholder Warrants, and 24,500 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(41)
|
Matthew Riordan has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 8,400 Common Shares, 8,400 Selling Shareholder Warrants,
and 8,400 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 8,400 Common Shares, 8,400 Selling Shareholder Warrants, and 8,400 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(42)
|
John W. Ronson has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 7,700 Common Shares, 7,700 Selling Shareholder Warrants,
and 7,700 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 7,700 Common Shares, 7,700 Selling Shareholder Warrants, and 7,700 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(43)
|
E. Louise McGraw has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 14,000 Common Shares, 14,000 Selling Shareholder Warrants,
and 14,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 14,000 Common Shares, 14,000 Selling Shareholder Warrants, and 14,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(44)
|
Cindy Stephanie MacDonald has voting and investment power over the Common Shares and the Warrants.
The jurisdiction of the selling security holder is Canada. Beneficial ownership includes 15,400 Common Shares, 15,400 Selling Shareholder
Warrants, and 15,400 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 15,400 Common Shares, 15,400 Selling Shareholder Warrants, and 15,400 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
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(45)
|
Thomas F. Hart has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 15,500 Common Shares, 15,500 Selling Shareholder Warrants,
and 15,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 15,500 Common Shares, 15,500 Selling Shareholder Warrants, and 15,500 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(46)
|
Adrian Christilaw has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 23,550 Common Shares, 23,550 Selling Shareholder
Warrants, and 23,550 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 23,550 Common Shares, 23,550 Selling Shareholder Warrants, and 23,550 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
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(47)
|
Brenda Wilkinson has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 15,350 Common Shares, 15,350 Selling Shareholder Warrants,
and 15,350 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 15,350 Common Shares, 15,350 Selling Shareholder Warrants, and 15,350 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(48)
|
Paul Petersen has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 14,600 Common Shares, 14,600 Selling Shareholder Warrants,
and 14,600 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 14,600 Common Shares, 14,600 Selling Shareholder Warrants, and 14,600 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(49)
|
Courtland Peterson has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 7,700 Common Shares, 7,700 Selling Shareholder
Warrants, and 7,700 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 7,700 Common Shares, 7,700 Selling Shareholder Warrants, and 7,700 Common Shares acquirable upon exercise of
Selling Shareholder Warrants.
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(50)
|
Patricia Jean Lovelock has voting and investment power over the Common Shares and the Warrants.
The jurisdiction of the selling security holder is Canada. Beneficial ownership includes 11,500 Common Shares, 11,500 Selling Shareholder
Warrants, and 11,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 11,500 Common Shares, 11,500 Selling Shareholder Warrants, and 11,500 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
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(51)
|
Debra Petersen has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 17,300 Common Shares, 17,300 Selling Shareholder Warrants,
and 17,300 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 17,300 Common Shares, 17,300 Selling Shareholder Warrants, and 17,300 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(52)
|
Mary De St. Croix has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 10,500 Common Shares, 10,500 Selling Shareholder
Warrants, and 10,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 10,500 Common Shares, 10,500 Selling Shareholder Warrants, and 10,500 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
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(53)
|
N. Ross De St. Croix has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 10,500 Common Shares, 10,500 Selling Shareholder
Warrants, and 10,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 10,500 Common Shares, 10,500 Selling Shareholder Warrants, and 10,500 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
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(54)
|
Jeff Woodcock has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 12,000 Common Shares, 12,000 Selling Shareholder Warrants,
and 12,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 12,000 Common Shares, 12,000 Selling Shareholder Warrants, and 12,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(55)
|
Colin Wallace has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 6,750 Common Shares, 6,750 Selling Shareholder Warrants,
and 6,750 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 6,750 Common Shares, 6,750 Selling Shareholder Warrants, and 6,750 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(56)
|
Paula J Sinclair has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 16,000 Common Shares, 16,000 Selling Shareholder Warrants,
and 16,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 16,000 Common Shares, 16,000 Selling Shareholder Warrants, and 16,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(57)
|
Ralph Usher has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 33,000 Common Shares, 33,000 Selling Shareholder Warrants,
and 33,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 33,000 Common Shares, 33,000 Selling Shareholder Warrants, and 33,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(58)
|
Marianna Elizabeth Smith has voting and investment power over the Common Shares and the Warrants.
The jurisdiction of the selling security holder is Canada. Beneficial ownership includes 13,500 Common Shares, 13,500 Selling Shareholder
Warrants, and 13,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 13,500 Common Shares, 13,500 Selling Shareholder Warrants, and 13,500 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
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(59)
|
Murray Cameron Smith has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 12,000 Common Shares, 12,000 Selling Shareholder
Warrants, and 12,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 12,000 Common Shares, 12,000 Selling Shareholder Warrants, and 12,000 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
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(60)
|
Ryan Brown has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 24,000 Common Shares, 24,000 Selling Shareholder Warrants,
and 24,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 24,000 Common Shares, 24,000 Selling Shareholder Warrants, and 24,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(61)
|
R. Dean Gommier has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 8,500 Common Shares, 8,500 Selling Shareholder Warrants,
and 8,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 8,500 Common Shares, 8,500 Selling Shareholder Warrants, and 8,500 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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(62)
|
Audrey Mae Gommier has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 6,000 Common Shares, 6,000 Selling Shareholder
Warrants, and 6,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 6,000 Common Shares, 6,000 Selling Shareholder Warrants, and 6,000 Common Shares acquirable upon exercise of
Selling Shareholder Warrants.
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(63)
|
Bohdan J. Wynnyk has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 10,000 Common Shares, 10,000 Selling Shareholder Warrants,
and 10,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 10,000 Common Shares, 10,000 Selling Shareholder Warrants, and 10,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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|
(64)
|
Tessa J. Kane has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 35,000 Common Shares, 35,000 Selling Shareholder Warrants,
and 35,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 35,000 Common Shares, 35,000 Selling Shareholder Warrants, and 35,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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|
(65)
|
William Kennedy has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 11,000 Common Shares, 11,000 Selling Shareholder Warrants,
and 11,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 11,000 Common Shares, 11,000 Selling Shareholder Warrants, and 11,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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|
(66)
|
Calvin Bruce Hawke has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 12,000 Common Shares, 12,000 Selling Shareholder
Warrants, and 12,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 12,000 Common Shares, 12,000 Selling Shareholder Warrants, and 12,000 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
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|
(67)
|
Craig Jacques has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 11,000 Common Shares, 11,000 Selling Shareholder Warrants,
and 11,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 11,000 Common Shares, 11,000 Selling Shareholder Warrants, and 11,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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|
(68)
|
Eugene O'Brien has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 8,000 Common Shares, 8,000 Selling Shareholder Warrants,
and 8,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 8,000 Common Shares, 8,000 Selling Shareholder Warrants, and 8,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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|
(69)
|
Babette Howell has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 8,000 Common Shares, 8,000 Selling Shareholder Warrants,
and 8,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 8,000 Common Shares, 8,000 Selling Shareholder Warrants, and 8,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
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|
(70)
|
Ben Depew and Nancy Depew have voting and investment power over the Common Shares and the
Warrants. The jurisdiction of the selling security holders is Canada. Beneficial ownership includes 30,000 Common Shares,
30,000 Selling Shareholder Warrants, and 30,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling
shareholders are offering pursuant to this prospectus, 30,000 Common Shares, 30,000 Selling Shareholder Warrants, and 30,000
Common Shares acquirable upon exercise of Selling Shareholder Warrants.
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|
(71)
|
Linda Hazel Hodder has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holders is Canada. Beneficial ownership includes 10,000 Common Shares, 10,000 Selling Shareholder
Warrants, and 10,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholders are offering pursuant
to this prospectus, 10,000 Common Shares, 10,000 Selling Shareholder Warrants, and 10,000 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
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|
(72)
|
Mark Ferguson has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 11,000 Common Shares, 11,000 Selling Shareholder Warrants,
and 11,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 11,000 Common Shares, 11,000 Selling Shareholder Warrants, and 11,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(73)
|
Lynn Marie Medve-Jones has voting and investment power over the Common Shares and the Warrants.
The jurisdiction of the selling security holder is Canada. Beneficial ownership includes 11,000 Common Shares, 11,000 Selling Shareholder
Warrants, and 11,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 11,000 Common Shares, 11,000 Selling Shareholder Warrants, and 11,000 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
|
|
(74)
|
Joanne Bourne has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 11,500 Common Shares, 11,500 Selling Shareholder Warrants,
and 11,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 11,500 Common Shares, 11,500 Selling Shareholder Warrants, and 11,500 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(75)
|
Harry Fox has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 7,700 Common Shares, 7,700 Selling
Shareholder Warrants, and 7,700 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is
offering pursuant to this prospectus, 7,700 Common Shares, 7,700 Selling Shareholder Warrants, and 7,700 Common Shares
acquirable upon exercise of Selling Shareholder Warrants. Harry Fox may be deemed to be a beneficial owner of the securities
of the Company owned by 1486618 Ontario Inc. See footnote 139.
|
|
(76)
|
Heidi E. Petersen has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 10,500 Common Shares, 10,500 Selling Shareholder
Warrants, and 10,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 10,500 Common Shares, 10,500 Selling Shareholder Warrants, and 10,500 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
|
|
(77)
|
Karen E. Watts has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 7,700 Common Shares, 7,700 Selling Shareholder Warrants,
and 7,700 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 7,700 Common Shares, 7,700 Selling Shareholder Warrants, and 7,700 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(78)
|
David Graham Rutherford has voting and investment power over the Common Shares and the Warrants.
The jurisdiction of the selling security holder is Canada. Beneficial ownership includes 12,000 Common Shares, 12,000 Selling Shareholder
Warrants, and 12,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 12,000 Common Shares, 12,000 Selling Shareholder Warrants, and 12,000 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
|
|
(79)
|
Chad T. Smith has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 12,000 Common Shares, 12,000 Selling Shareholder Warrants,
and 12,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 12,000 Common Shares, 12,000 Selling Shareholder Warrants, and 12,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(80)
|
Dennis E. Walton has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 8,000 Common Shares, 8,000 Selling Shareholder Warrants,
and 8,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 8,000 Common Shares, 8,000 Selling Shareholder Warrants, and 8,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(81)
|
Cynthia Walton has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 7,200 Common Shares, 7,200 Selling Shareholder Warrants,
and 7,200 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 7,200 Common Shares, 7,200 Selling Shareholder Warrants, and 7,200 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(82)
|
Beverly Jane MacDonald has voting and investment power over the Common Shares and the Warrants.
The jurisdiction of the selling security holder is Canada. Beneficial ownership includes 7,500 Common Shares, 7,500 Selling Shareholder
Warrants, and 7,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 7,500 Common Shares, 7,500 Selling Shareholder Warrants, and 7,500 Common Shares acquirable upon exercise of
Selling Shareholder Warrants.
|
|
(83)
|
Sherry Reed has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 8,000 Common Shares, 8,000 Selling Shareholder Warrants,
and 8,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 8,000 Common Shares, 8,000 Selling Shareholder Warrants, and 8,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(84)
|
Guy W. Heaslip has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 8,000 Common Shares, 8,000 Selling Shareholder Warrants,
and 8,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 8,000 Common Shares, 8,000 Selling Shareholder Warrants, and 8,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(85)
|
Marilyn L. Shaver has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 11,000 Common Shares, 11,000 Selling Shareholder
Warrants, and 11,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 11,000 Common Shares, 11,000 Selling Shareholder Warrants, and 11,000 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
|
|
(86)
|
John D. Reed has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 7,300 Common Shares, 7,300 Selling Shareholder Warrants,
and 7,300 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 7,300 Common Shares, 7,300 Selling Shareholder Warrants, and 7,300 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(87)
|
Kathleen Vandyk has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 13,500 Common Shares, 13,500 Selling Shareholder Warrants,
and 13,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 13,500 Common Shares, 13,500 Selling Shareholder Warrants, and 13,500 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(88)
|
Kim Portelli has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 11,000 Common Shares, 11,000 Selling Shareholder Warrants,
and 11,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 11,000 Common Shares, 11,000 Selling Shareholder Warrants, and 11,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(89)
|
Kandice VanSickle has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 11,000 Common Shares, 11,000 Selling Shareholder
Warrants, and 11,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 11,000 Common Shares, 11,000 Selling Shareholder Warrants, and 11,000 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
|
|
(90)
|
Patrick Joseph Dietrich has voting and investment power over the Common Shares and the Warrants.
The jurisdiction of the selling security holder is Canada. Beneficial ownership includes 3,550 Common Shares, 3,550 Selling Shareholder
Warrants, and 3,550 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 3,550 Common Shares, 3,550 Selling Shareholder Warrants, and 3,550 Common Shares acquirable upon exercise of
Selling Shareholder Warrants.
|
|
(91)
|
Marilyn Yvonne Sevenpifer has voting and investment power over the Common Shares and the Warrants.
The jurisdiction of the selling security holder is Canada. Beneficial ownership includes 50,000 Common Shares, 50,000 Selling Shareholder
Warrants, and 50,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 50,000 Common Shares, 50,000 Selling Shareholder Warrants, and 50,000 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
|
|
(92)
|
William N. Clarridge has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 14,000 Common Shares, 14,000 Selling Shareholder
Warrants, and 14,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 14,000 Common Shares, 14,000 Selling Shareholder Warrants, and 14,000 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
|
|
(93)
|
Vito Tuori has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 8,000 Common Shares, 8,000 Selling Shareholder Warrants,
and 8,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 8,000 Common Shares, 8,000 Selling Shareholder Warrants, and 8,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(94)
|
Terry Lynn Cook has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 4,000 Common Shares, 4,000 Selling Shareholder Warrants,
and 4,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 4,000 Common Shares, 4,000 Selling Shareholder Warrants, and 4,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(95)
|
Michael Bruce Wannop has voting and investment power over the Common Shares and the
Warrants.
The jurisdiction of the selling security holder is Canada. Beneficial ownership includes 18,200 Common Shares, 18,200
Selling
Shareholder
Warrants,
and
18,200
shares
acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this prospectus,
18,200 Common Shares, 18,200 Selling Shareholder Warrants, and 18,200 Common Shares acquirable upon exercise of Selling
Shareholder Warrants. Michael Bruce Wannop also has voting and investment power over securities of the Company that he holds
with
Wendy C. Spiegelberg. See footnote 112.
|
|
(96)
|
Donna Marie Stewart has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 7,700 Common Shares, 7,700 Selling Shareholder
Warrants, and 7,700 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 7,700 Common Shares, 7,700 Selling Shareholder Warrants, and 7,700 Common Shares acquirable upon exercise of
Selling Shareholder Warrants.
|
|
(97)
|
Mark Lundgren has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 12,000 Common Shares, 12,000 Selling Shareholder Warrants,
and 12,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 12,000 Common Shares, 12,000 Selling Shareholder Warrants, and 12,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(98)
|
John Wyatt has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 12,000 Common Shares, 12,000 Selling Shareholder Warrants,
and 12,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 12,000 Common Shares, 12,000 Selling Shareholder Warrants, and 12,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(99)
|
Simone Camilla Clark has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 16,200 Common Shares, 16,200 Selling Shareholder
Warrants, and 16,200 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 16,200 Common Shares, 16,200 Selling Shareholder Warrants, and 16,200 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
|
|
(100)
|
Heather Wyatt has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 15,000 Common Shares, 15,000 Selling Shareholder Warrants,
and 15,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 15,000 Common Shares, 15,000 Selling Shareholder Warrants, and 15,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(101)
|
Michael Aasla has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 3,000 Common Shares, 3,000 Selling Shareholder Warrants,
and 3,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 3,000 Common Shares, 3,000 Selling Shareholder Warrants, and 3,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(102)
|
John M. Howell has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 5,500 Common Shares, 35,000 February
2017 Warrants, 35,000 Common Shares acquirable upon exercise of February 2017 Warrants, 5,500
Selling Shareholder Warrants, and 5,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling
shareholder is offering pursuant to this prospectus, 5,500 Common Shares, 5,500 Selling Shareholder Warrants, and 5,500
Common Shares acquirable upon exercise of Selling Shareholder Warrants.
|
|
(103)
|
Randy Wilson has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 28,500 Common Shares, 28,500 Selling Shareholder Warrants,
and 28,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 28,500 Common Shares, 28,500 Selling Shareholder Warrants, and 28,500 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(104)
|
Gloria Christilaw has voting and investment power over the Common Shares and the Warrants.
The jurisdiction of the selling security holder is Canada. Beneficial ownership includes 11,000 Common Shares, 158,850
January 2016 Warrants, 158,850 Common Shares acquirable upon exercise of January 2016 Warrants, 220,000 February 2017
Warrants, 220,000 Common Shares acquirable upon exercise of February 2017 Warrants, 11,000
Selling
Shareholder
Warrants,
and 11,000
shares
acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this prospectus,
11,000 Common Shares, 11,000 Selling Shareholder Warrants, and 11,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants. Gloria Christilaw may be deemed to be a beneficial owner of the securities of the Company owned by
David Christilaw CHARTERED ACCOUNTANT PROFESSIONAL CORPORATION and 939042 Ontario Inc. See footnote 141.
|
|
(105)
|
Paul T. Shimoda has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 14,000 Common Shares, 14,000 Selling Shareholder Warrants,
and 14,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 14,000 Common Shares, 14,000 Selling Shareholder Warrants, and 14,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(106)
|
Joan Prout has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 10,000 Common Shares, 10,000 Selling Shareholder Warrants,
and 10,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 10,000 Common Shares, 10,000 Selling Shareholder Warrants, and 10,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(107)
|
Sarah Christilaw has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 86,550 Common Shares, 86,550 Selling Shareholder Warrants,
and 86,550 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 86,550 Common Shares, 86,550 Selling Shareholder Warrants, and 86,550 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(108)
|
Jeffrey Stuart Depew has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 7,000 Common Shares, 7,000 Selling Shareholder
Warrants, and 7,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 7,000 Common Shares, 7,000 Selling Shareholder Warrants, and 7,000 Common Shares acquirable upon exercise of
Selling Shareholder Warrants.
|
|
(109)
|
Maria Elizabeth Moore has voting and investment power over the Common Shares and the
Warrants. The jurisdiction of the selling security holder is Canada. Beneficial ownership includes 30,000 Common Shares,
105,000 January 2016 Warrants, 105,000 Common Shares acquirable upon exercise of January 2016 Warrants, 155,000 February 2017
Warrants, 155,000 Common Shares acquirable upon exercise of February 2017 Warrants, 30,000 Selling Shareholder Warrants, and 30,000 shares
acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this prospectus,
30,000 Common Shares, 30,000 Selling Shareholder Warrants, and 30,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(110)
|
Cameron MacDonald has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 10,500 Common Shares, 10,500 Selling Shareholder
Warrants, and 10,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 10,500 Common Shares, 10,500 Selling Shareholder Warrants, and 10,500 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
|
|
(111)
|
Deborah Sokol-MacDonald has voting and investment power over the Common Shares and the Warrants.
The jurisdiction of the selling security holder is Canada. Beneficial ownership includes 8,000 Common Shares, 8,000 Selling Shareholder
Warrants, and 8,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 8,000 Common Shares, 8,000 Selling Shareholder Warrants, and 8,000 Common Shares acquirable upon exercise of
Selling Shareholder Warrants.
|
|
(112)
|
Michael Bruce Wannop and Wendy C. Spiegelberg has voting and investment power over the
Common Shares and the Warrants. The jurisdiction of the selling security holder is Canada. Beneficial ownership includes
281,500 Common Shares, 140,000 January 2016 Warrants, 140,000 Common Shares acquirable upon exercise of January 2016
Warrants, 250,000 February 2017 Warrants, 250,000 Common Shares acquirable upon exercise of February 2017 Warrants, 31,500 Selling Shareholder
Warrants, and 31,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering
pursuant to this prospectus, 31,500 Common Shares, 31,500 Selling Shareholder Warrants, and 31,500 Common Shares acquirable
upon exercise of Selling Shareholder Warrants.
|
|
(113)
|
Wendy C. Spiegelberg has voting and investment power over the Common Shares and the
Warrants.
The jurisdiction of the selling security holder is Canada. Beneficial ownership includes 7,700 Common Shares, 7,700
Selling Shareholder Warrants, and 7,700 shares acquirable upon exercise of Selling Shareholder Warrants. The selling
shareholder is offering pursuant to this prospectus, 7,700 Common Shares, 7,700 Selling Shareholder Warrants, and 7,700
Common Shares acquirable upon exercise of Selling Shareholder Warrants. Wendy C. Spiegelberg also has voting and investment
power over securities of the Company that she holds with Michael Bruce Wannop. See footnote 112.
|
|
(114)
|
Robert Coggins has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 12,000 Common Shares, 12,000 Selling Shareholder Warrants,
and 12,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 12,000 Common Shares, 12,000 Selling Shareholder Warrants, and 12,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(115)
|
Lorraine A. Gavloski has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 8,000 Common Shares, 8,000 Selling Shareholder
Warrants, and 8,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 8,000 Common Shares, 8,000 Selling Shareholder Warrants, and 8,000 Common Shares acquirable upon exercise of
Selling Shareholder Warrants.
|
|
(116)
|
Donna Walker has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 10,500 Common Shares, 10,500 Selling Shareholder Warrants,
and 10,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 10,500 Common Shares, 10,500 Selling Shareholder Warrants, and 10,500 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(117)
|
David J. Walker has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 2,000 Common Shares, 2,000 Selling Shareholder Warrants,
and 2,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 2,000 Common Shares, 2,000 Selling Shareholder Warrants, and 2,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(118)
|
John A Closs has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 12,000 Common Shares, 12,000 Selling Shareholder Warrants,
and 12,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 12,000 Common Shares, 12,000 Selling Shareholder Warrants, and 12,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(119)
|
Rose Huysentruyt-Closs has voting and investment power over the Common Shares and the Warrants.
The jurisdiction of the selling security holder is Canada. Beneficial ownership includes 12,000 Common Shares, 12,000 Selling Shareholder
Warrants, and 12,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant
to this prospectus, 12,000 Common Shares, 12,000 Selling Shareholder Warrants, and 12,000 Common Shares acquirable upon exercise
of Selling Shareholder Warrants.
|
|
(120)
|
David Powers has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 10,500 Common Shares, 10,500 Selling Shareholder Warrants,
and 10,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 10,500 Common Shares, 10,500 Selling Shareholder Warrants, and 10,500 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(121)
|
Howard Louie has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 25,000 Common Shares, 25,000 Selling Shareholder Warrants,
and 25,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 25,000 Common Shares, 25,000 Selling Shareholder Warrants, and 25,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(122)
|
Hong (Iris) Duan has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 15,000 Common Shares, 15,000 Selling Shareholder Warrants,
and 15,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 15,000 Common Shares, 15,000 Selling Shareholder Warrants, and 15,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(123)
|
Ping Shen has voting and investment power over the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Beneficial ownership includes 100,000 Common Shares, 100,000 Selling
Shareholder Warrants, and 100,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder
is
offering pursuant to this prospectus, 100,000 Common Shares, 100,000 Selling Shareholder Warrants, and 100,000 Common Shares
acquirable upon exercise of Selling Shareholder Warrants. During fiscal 2014, 2015 and 2016, Ping Shen served as a paid
consultant
to
the
Company.
|
|
(124)
|
Philip Gravelle has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 27,000 Common Shares, 13,500 Selling Shareholder Warrants,
and 13,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 13,500 Common Shares, 13,500 Selling Shareholder Warrants, and 13,500 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(125)
|
Morgan Rock has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 27,000 Common Shares, 13,500 Selling Shareholder Warrants,
and 13,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 13,500 Common Shares, 13,500 Selling Shareholder Warrants, and 13,500 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(126)
|
Rudy Yanick has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 20,500 Common Shares, 20,500 Selling Shareholder Warrants,
and 20,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 20,500 Common Shares, 20,500 Selling Shareholder Warrants, and 20,500 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(127)
|
Ron Birch has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 30,000 Common Shares, 30,000 Selling Shareholder Warrants,
and 30,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 30,000 Common Shares, 30,000 Selling Shareholder Warrants, and 30,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(128)
|
Chih Chun Wu has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 55,000 Common Shares, 55,000 Selling Shareholder Warrants,
and 55,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 55,000 Common Shares, 55,000 Selling Shareholder Warrants, and 55,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(129)
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Muthupalaniappan Kalairajah has voting and investment power over the Common Shares and the
Warrants. The jurisdiction of the selling security holder is the United Kingdom. Beneficial ownership includes 20,000
Common
Shares,
20,000 Selling Shareholder Warrants, and 20,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling
shareholder is offering pursuant to this prospectus, 20,000 Common Shares, 20,000 Selling Shareholder Warrants, and 20,000
Common Shares acquirable upon exercise of Selling Shareholder Warrants. Muthupalaniappan Kalairajah may be deemed to be a beneficial owner of the securities of the company owned by 2379388 Ontario Ltd. See footnote 132.
|
|
(130)
|
Donald F Firth has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 20,000 Common Shares, 20,000 Selling Shareholder Warrants,
and 20,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 20,000 Common Shares, 20,000 Selling Shareholder Warrants, and 20,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(131)
|
Ramona Vorberg has voting and investment power over the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Beneficial ownership includes 56,550 Common Shares, 56,550 Selling Shareholder Warrants,
and 56,550 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 56,550 Common Shares, 56,550 Selling Shareholder Warrants, and 56,550 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(132)
|
The
selling security holder, 2379388 Ontario Ltd., is the registered owner of the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Muthupalaniappan Kalairajah has voting and investment power over the Common Shares and
the Warrants, and may be deemed to be a beneficial owner. Beneficial ownership includes 85,000 Common Shares, 40,000 February
2017 Warrants, 40,000 Common Shares acquirable upon exercise of February 2017 Warrants, 45,000 Selling Shareholder Warrants, and
45,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this prospectus,
45,000 Common Shares, 45,000 Selling Shareholder Warrants, and 45,000 Common Shares acquirable upon exercise of Selling Shareholder
Warrants.
|
|
(133)
|
The
selling security holder, Orca Capital GmbH, is the registered owner of the Common Shares and the Warrants. The jurisdiction of
the selling security holder is Germany. Roman Grodon, Wolfgang Burkhardt and Thomas King have voting and investment power over
the Common Shares and the Warrants, and may be deemed to be beneficial owners. Beneficial ownership includes 300,000 Common Shares,
300,000 Selling Shareholder Warrants, and 300,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling
shareholder is offering pursuant to this prospectus, 300,000 Common Shares, 300,000 Selling Shareholder Warrants, and 300,000
Common Shares acquirable upon exercise of Selling Shareholder Warrants.
|
|
(134)
|
The
selling security holder, Uber Strategies LP, is the registered owner of the Common Shares and the Warrants. The jurisdiction of
the selling security holder is Canada. Uber Strategies LP is managed by Stratigis Capital Advisors. Robert Celej and Dan Papulkas have voting and investment power over the Common Shares and the Warrants, and may be deemed to be beneficial
owners. Beneficial ownership includes 115,300 Common Shares, 115,300 Selling Shareholder Warrants, and 115,300 shares acquirable
upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this prospectus, 115,300 Common
Shares, 115,300 Selling Shareholder Warrants, and 115,300 Common Shares acquirable upon exercise of Selling Shareholder Warrants.
|
|
(135)
|
The
selling security holder, Confederation Capital Corp, is the registered owner of the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Robert Palkowski has voting and investment power over the Common Shares and the Warrants,
and may be deemed to be a beneficial owner. Beneficial ownership includes 25,000 Common Shares, 25,000 Selling Shareholder Warrants,
and 25,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 25,000 Common Shares, 25,000 Selling Shareholder Warrants, and 25,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(136)
|
The
selling security holder, 9642218 Canada Inc, is the registered owner of the Common Shares and the Warrants. The jurisdiction of
the selling security holder is Canada. Aurelio Palermo has voting and investment power over the Common Shares and the Warrants,
and may be deemed to be a beneficial owner. Beneficial ownership includes 500,000 Common Shares, 500,000 Selling Shareholder Warrants,
and 500,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 500,000 Common Shares, 500,000 Selling Shareholder Warrants, and 500,000 Common Shares acquirable upon exercise of
Selling Shareholder Warrants.
|
|
(137)
|
The
selling security holder, Weber Investment Corporation, is the registered owner of the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Gary Weber has voting and investment power over the Common Shares and the Warrants,
and may be deemed to be a beneficial owner. Beneficial ownership includes 55,650 Common Shares, 210,500 January 2016 Warrants,
210,500 Common Shares acquirable upon exercise of January 2016 Warrants, 266,143 February 2017 Warrants, 266,143 Common Shares
acquirable upon exercise of February 2017 Warrants, 55,650 Selling Shareholder Warrants, and 55,650 shares acquirable upon exercise
of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this prospectus, 55,650 Common Shares, 55,650
Selling Shareholder Warrants, and 55,650 Common Shares acquirable upon exercise of Selling Shareholder Warrants.
|
|
(138)
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The
selling security holder, 2506764 Ontario Inc, is the registered owner of the Common Shares and the Warrants. The jurisdiction
of the selling security holder is Canada. Colleen Fox has voting and investment power over the Common Shares and the Warrants,
and may be deemed to be a beneficial owner. Beneficial ownership includes 27,000 Common Shares, 27,000 Selling Shareholder Warrants,
and 27,000 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this
prospectus, 27,000 Common Shares, 27,000 Selling Shareholder Warrants, and 27,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants.
|
|
(139)
|
The selling security holder, 1486618 Ontario Inc, is the registered
owner of the Common Shares and the Warrants. The jurisdiction of the selling security holder is Canada. Harry Fox has voting and
investment power over the Common Shares and the Warrants, and may be deemed to be a beneficial owner. Beneficial ownership includes
15,400 Common Shares, 15,400 Selling Shareholder Warrants, and 15,400 shares acquirable upon exercise of Selling Shareholder Warrants.
The selling shareholder is offering pursuant to this prospectus, 15,400 Common Shares, 15,400 Selling Shareholder Warrants, and
15,400 Common Shares acquirable upon exercise of Selling Shareholder Warrants.
|
|
(140)
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The selling security holder, 1589936 Ontario Inc, is the registered
owner of the Common Shares and the Warrants. The jurisdiction of the selling security holder is Canada. Claireete Martin and Edward
Ivan Martin have voting and investment power over the Common Shares and the Warrants, and may be deemed to be beneficial owners.
Beneficial ownership includes 38,500 Common Shares, 105,000 January 2016 Warrants, 105,000 Common Shares acquirable upon exercise
of January 2016 Warrants, 180,000 February 2017 Warrants, 180,000 Common Shares acquirable upon exercise of February 2017 Warrants,
38,500 Selling Shareholder Warrants, and 38,500 shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholder
is offering pursuant to this prospectus, 38,500 Common Shares, 38,500 Selling Shareholder Warrants, and 38,500 Common Shares acquirable
upon exercise of Selling Shareholder Warrants.
|
|
(141)
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David Christilaw has voting and investment power over the Common Shares and the Warrants.
The
securities beneficially owned and offered hereunder are held by David Christilaw both individually and with Gloria
Christilaw
through
David
Christilaw
CHARTERED ACCOUNTANT PROFESSIONAL CORPORATION, a professional corporation organized under the laws of Ontario and 939042
Ontario Inc., a corporation incorporated under the laws of Ontario, Canada. David Christilaw and Gloria Christilaw have
voting and investment power over the securities held by David Christilaw CHARTERED ACCOUNTANT PROFESSIONAL CORPORATION and 939042 Ontario Inc. The jurisdiction of the selling security holder is Canada. Beneficial
ownership includes 44,000 Common Shares, 44,000 Selling Shareholder Warrants, 44,000 shares acquirable upon exercise of
Selling Shareholder Warrants, 220,000 shares acquirable upon exercise of February 2017 Warrants, and 158,850 shares
acquirable upon exercise of January 2016 Warrants. The selling shareholder is offering pursuant to this prospectus,
44,000 Common Shares, 44,000 Selling Shareholder Warrants, and 44,000 Common Shares acquirable upon exercise of Selling
Shareholder Warrants
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(142)
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Adam Christilaw has voting and investment power over the Common Shares and the Warrants. The
securities beneficially owned and offered hereunder are held by Adam Christilaw both individually and through a solely owned
entity, 2064501 Ontario Inc., which is a corporation incorporated under the laws of Ontario, Canada. Adam Christilaw is the
person at 2064501 Ontario Inc. that exercises voting and investment power over the Common Shares. The jurisdiction of the
selling security holder is Canada. Beneficial ownership includes 35,700 Common Shares, 35,700 Selling Shareholder
Warrants, 35,700 shares acquirable upon exercise of Selling Shareholder Warrants, 118,072 shares acquirable upon exercise of
February 2017 Warrants, and 87,359 shares acquirable upon exercise of January 2016 Warrants. The selling shareholder is
offering pursuant to this prospectus, 35,700 Common Shares 35,700 Selling Shareholder Warrants and 35,700 Common Shares
acquirable upon exercise of Selling Shareholder Warrants. Adam Christilaw also has voting and investment power over securities of the Company that he holds with
Hayley Christilaw. See footnote 144.
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|
(143)
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Hayley Christilaw has voting and investment power over the Common Shares and the Warrants.
The jurisdiction of the selling security holder is Canada. Beneficial ownership includes 6,700 Common Shares, 87,359 January
2016 Warrants, 87,359 Common Shares acquirable upon exercise of January 2016 Warrants, 84,429 February 2017 Warrants, 84,429
Common Shares acquirable upon exercise of February 2017 Warrants, 6,700
Selling Shareholder Warrants, and 6,700 shares acquirable upon
exercise of Selling Shareholder Warrants. The selling shareholder is offering pursuant to this prospectus, 6,700 Common
Shares, 6,700 Selling Shareholder Warrants, and 6,700 Common Shares acquirable upon exercise of Selling Shareholder
Warrants. Hayley Christilaw also has voting and investment power over securities of the Company that she holds with
Adam Christilaw. See footnote 144.
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|
(144)
|
Adam Christilaw and Hayley Christilaw have voting and investment power over the Common
Shares and the Warrants. The jurisdiction of the selling security holders is Canada. Beneficial ownership includes 34,100
Common Shares, 96,519 January 2016 Warrants, 96,519 Common Shares acquirable upon exercise of January 2016 Warrants, 131,072
February 2017 Warrants, 131,072 Common Shares acquirable upon exercise of February 2017 Warrants, 34,100 Selling Shareholder Warrants, and
34,100
shares acquirable upon exercise of Selling Shareholder Warrants. The selling shareholders are offering pursuant to this
prospectus, 34,100 Common Shares, 34,100 Selling Shareholder Warrants, and 34,100 Common Shares acquirable upon exercise of
Selling Shareholder Warrants.
|
|
(145)
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The
selling security holder, Mackie Research Capital Corporation, is the registered owner of the Common Shares and the Warrants. The
jurisdiction of the selling security holder is Canada. Patrick Walsh has voting and investment power over the Common Shares and
the Warrants, and may be deemed to be a beneficial owners. Beneficial ownership includes 60,450 January 2016 Warrants, 60,450
Common Shares acquirable upon exercise of January 2016 Warrants, 182,910 February 2017 Warrants, 182,910 Common Shares acquirable
upon exercise of February 2017 Warrants, 230,005 Compensation Warrants, and 230,005 shares acquirable upon exercise of Compensation
Warrants. The selling shareholder is offering pursuant to this prospectus, 230,005 Compensation Warrants, and 230,005 Common Shares
acquirable upon exercise of Compensation Warrants. Mackie received the Common Shares and Compensation Warrants being offered pursuant
to this prospectus as compensation for services rendered as underwriter in the Private Placement.
|
|
(146)
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The selling security holder, Anson Investments Master Fund LP, is
the registered owner of the Common Shares and the Warrants. Anson Advisors Inc and Anson Funds Management LP, the Co-Investment Advisers of Anson Investments Master Fund
LP (“Anson”), hold voting and dispositive power over the Common Shares held by Anson. Bruce Winson is the managing
member of Anson Management GP LLC, which is the general partner of Anson Funds Management LP. Moez Kassam and Adam Spears are directors
of Anson Advisors Inc. Mr. Winson, Mr. Kassam and Mr. Spears each disclaim beneficial ownership of these Common Shares except to
the extent of their pecuniary interest therein. The principal business address of Anson is 190 Elgin Ave; George Town, Grand Cayman. Beneficial ownership
includes 342,857 Common Shares, 142,857 February 2017 Warrants, 142,857 Common Shares acquirable upon exercise of February 2017
Warrants, 200,000 Selling Shareholder Warrants, and 200,000 shares acquirable upon exercise of Selling Shareholder Warrants. The
selling shareholder is offering pursuant to this prospectus, 200,000 Common Shares, 200,000 Selling Shareholder Warrants, and 200,000
Common Shares acquirable upon exercise of Selling Shareholder Warrants.
|
Plan
of Distribution
We are registering the
Common Shares and Warrants to permit the resale of those Common Shares and Warrants from time to time after the date of this prospectus
at the discretion of the holders of such Common Shares and Warrants. We will not receive any of the proceeds from the sale by the
selling shareholders of the Common Shares and Warrants. However, upon exercise we will receive the cash exercise price of the Warrants.
We will bear all fees and expenses incident to our obligation to register the Common Shares and Warrants.
The selling shareholders
may, at their discretion, sell all, none, or a portion of the Common Shares or Warrants beneficially owned by them and offered
hereby from time to time directly or through one or more underwriters, broker-dealers, or agents. If the Common Shares or Warrants
are sold through underwriters or broker-dealers, the selling shareholders will be responsible for underwriting discounts or commissions
or agent’s commissions. The Common Shares or Warrants may be sold in one or more transactions at fixed prices, at prevailing
market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. These sales may
be effected in transactions that may involve crosses or block transactions,
|
·
|
on any national securities exchange or quotation service on which the securities may be listed
or quoted at the time of sale;
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|
·
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in the over-the-counter market;
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|
·
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in transactions otherwise than on these exchanges or systems or in the over-the-counter market;
|
|
·
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through the writing of options, whether such options are listed on an options exchange or otherwise;
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|
·
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ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
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|
·
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block trades in which the broker-dealer will attempt to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the transaction;
|
|
·
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purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
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·
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an exchange distribution in accordance with the rules of the applicable exchange;
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·
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privately negotiated transactions;
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|
·
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sales pursuant to Rule 144;
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|
·
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broker-dealers may agree with the selling shareholders to sell a specified number of such shares
at a stipulated price per share;
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|
·
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a combination of any such methods of sale; and
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|
·
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any other method permitted pursuant to applicable law.
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If the selling shareholders
effect such transactions by selling Common Shares or Warrants to or through underwriters, broker-dealers, or agents, such underwriters,
broker-dealers, or agents may receive commissions in the form of discounts, concessions, or commissions from the selling shareholders
or commissions from purchasers of the Common Shares or Warrants for whom they may act as agent or to whom they may sell as principal
(which discounts, concessions, or commissions as to particular underwriters, broker-dealers, or agents may be in excess of those
customary in the types of transactions involved). In connection with sales of the Common Shares or Warrants or otherwise, the selling
shareholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the Common Shares
or Warrants in the course of hedging in positions they assume. The selling shareholders may also sell Common Shares or Warrants
short and deliver Common Shares or Warrants covered by this prospectus to close out short positions and to return borrowed shares
in connection with such short sales. The selling shareholders may also loan or pledge Common Shares or Warrants to broker-dealers
that in turn may sell such shares.
The selling shareholders
and any broker-dealer participating in the distribution of the Common Shares or Warrants may be deemed to be “underwriters”
within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer
may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the Common
Shares or Warrants is made, a prospectus supplement, if required, will be distributed that will set forth the aggregate amount
of Common Shares or Warrants being offered and the terms of the offering, including the name or names of any broker-dealers or
agents, any discounts, commissions, and other terms constituting compensation from the selling shareholders and any discounts,
commissions, or concessions allowed or re-allowed or paid to broker-dealers.
Under the securities laws
of some states, the Common Shares or Warrants may be sold in such states only through registered or licensed brokers or dealers.
In addition, in some states the Common Shares or Warrants may not be sold unless such shares have been registered or qualified
for sale in such state, or an exemption from registration or qualification is available and is complied with.
There can be no assurance
that any selling shareholder will sell any or all of the Common Shares or Warrants registered pursuant to the registration statement,
of which this prospectus forms a part.
The selling shareholders
and any other person participating in such distribution will be subject to applicable provisions of the Exchange Act, and the rules
and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of
purchases and sales of any of the Common Shares or Warrants by the selling shareholders and any other participating person. Regulation M
may also restrict the ability of any person engaged in the distribution of the Common Shares or Warrants to engage in market-making
activities with respect to the Common Shares or Warrants. All of the foregoing may affect the marketability of the Common Shares
or Warrants and the ability of any person or entity to engage in market-making activities with respect to the Common Shares or
Warrants.
We will pay all
expenses of the registration of the Common Shares or Warrants, estimated to be approximately $28,500 in total, including,
without limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities or
“blue sky” laws; provided, however, that a selling shareholder will pay all underwriting discounts and selling
commissions, if any. We will indemnify the selling shareholders against liabilities, including some liabilities under the
Securities Act, in accordance with applicable registration rights agreements, if any, or the selling shareholders will be
entitled to contribution. We may be indemnified by the selling shareholders against civil liabilities, including liabilities
under the Securities Act, that may arise from any written information furnished to us by the selling shareholder specifically
for use in this prospectus, in accordance with the related registration rights agreement, or we may be entitled to
contribution.
Once sold under the registration
statement, of which this prospectus forms a part, the Common Shares or Warrants will be freely tradable in the hands of persons
other than our affiliates.
Description
of Capital Stock
Common Shares
The authorized capital
of the Company consists of an unlimited number of Common Shares without par value, of which 197,819,163 were issued and outstanding
as at June 1, 2017. The holders of Common Shares are entitled to receive notice of and attend all meetings of shareholders, with
each Common Share held entitling the holder to one vote on any resolution to be passed at such shareholder meetings. The holders
of Common Shares are entitled to dividends if, as and when declared by the Board. The Common Shares are entitled, upon liquidation,
dissolution, or winding up of NioCorp, to receive the remaining assets of NioCorp available for distribution to shareholders.
There are no pre-emptive, conversion, or redemption rights attached to the Common Shares.
Exchange Controls
There are no governmental
laws, decrees, or regulations in Canada that restrict the export or import of capital, including foreign exchange controls, or
that affect the remittance of dividends, interest or other payments to non-resident holders of the securities of NioCorp, other
than Canadian withholding tax. See “Certain Canadian Federal Income Tax Considerations for U.S. Residents” below.
Certain Canadian Federal Income Tax Considerations for U.S.
Residents
The following summarizes
certain Canadian federal income tax consequences generally applicable under the
Income Tax Act
(Canada) and the regulations
enacted thereunder (collectively, the “Canadian Tax Act”) and the
Canada-United States Income Tax Convention (1980)
(the “Convention”) to the holding and disposition of Common Shares.
Comment is restricted
to holders of Common Shares each of whom, at all material times for the purposes of the Canadian Tax Act and the Convention, (i)
is resident solely in the United States, (ii) is entitled to the benefits of the Convention, (iii) holds all Common Shares as capital
property, (iii) holds no Common Shares that are “taxable Canadian property” (as defined in the Canadian Tax Act) of
the holder, (iv) deals at arm’s length with and is not affiliated with NioCorp, (v) does not and is not deemed to use or
hold any Common Shares in a business carried on in Canada, and (vi) is not an insurer that carries on business in Canada and elsewhere
(each such holder, a “U.S. Resident Holder”).
Certain U.S.-resident
entities that are fiscally transparent for United States federal income tax purposes (including limited liability companies) may
not in all circumstances be regarded by the Canada Revenue Agency (the “CRA”) as entitled to the benefits of the Convention.
Members of or holders of an interest in such an entity that holds Common Shares should consult their own tax advisers regarding
the extent, if any, to which the CRA will extend the benefits of the Convention to the entity in respect of its Common Shares.
Generally, a holder’s
Common Shares will be considered to be capital property of the holder provided that the holder is not a trader or dealer in securities,
did not acquire, hold, or dispose of the Common Shares in one or more transactions considered to be an adventure or concern in
the nature of trade (
i.e.
speculation), and does not hold the Common Shares in the course of carrying on a business.
Generally, a holder’s
Common Shares will not constitute “taxable Canadian property” of the holder at a particular time at which the Common
Shares are listed on a “designated stock exchange” (which currently includes the TSX) unless both of the following
conditions are true:
|
(i)
|
at any time during the 60-month period that ends at the particular time, 25% or more of the issued
shares of any class of the capital stock of NioCorp were owned by or belonged to one or any combination of
|
|
(B)
|
persons with whom the holder did not deal at arm’s length, and
|
|
(C)
|
partnerships in which the holder or a person referred to in clause (B) holds a membership interest
directly or indirectly through one or more partnerships, and
|
|
(ii)
|
at any time during the 60-month period that ends at the particular time, more than 50% of the fair
market value of the Common Shares was derived directly or indirectly from, one or any combination of, real or immovable property
situated in Canada, “Canadian resource properties” (as defined in the Canadian Tax Act), “timber resource properties”
(as defined in the Canadian Tax Act), or options in respect of, or interests in any of the foregoing, whether or not the property
exists.
|
This summary is based
on the current provisions of the Canadian Tax Act and the Convention in effect on the date hereof, all specific proposals to amend
the Canadian Tax Act and Convention publicly announced by or on behalf of the Minister of Finance (Canada) on or before the date
hereof, and the current published administrative and assessing policies of the CRA. It is assumed that all such amendments will
be enacted as currently proposed, and that there will be no other material change to any applicable law or administrative or assessing
practice, although no assurance can be given in these respects. Except as otherwise expressly provided, this summary does not take
into account any provincial, territorial, or foreign tax considerations, which may differ materially from those set out herein.
This summary is of a general nature only, is not exhaustive
of all possible Canadian federal income tax considerations, and is not intended to be and should not be construed as legal or tax
advice to any particular U.S. Resident Holder. U.S. Resident Holders are urged to consult their own tax advisers for advice with
respect to their particular circumstances. The discussion below is qualified accordingly.
A U.S. Resident Holder
who disposes or is deemed to dispose of one or more Common Shares generally should not thereby incur any liability for Canadian
federal income tax in respect of any capital gain arising as a consequence of the disposition.
A U.S. Resident Holder
to whom NioCorp pays or is deemed to pay a dividend on the holder’s Common Shares will be subject to Canadian withholding
tax, and NioCorp will be required to withhold the tax from the dividend and remit it to the CRA for the holder’s account.
The rate of withholding tax under the Canadian Tax Act is 25% of the gross amount of the dividend, but should generally be reduced
under the Convention to 15% (or, if the U.S. Resident Holder is a company which is the beneficial owner of at least 10% of the
voting stock of NioCorp, 5%) of the gross amount of the dividend. For this purpose, a company that is a resident of the United
States for purposes of the Canadian Tax Act and the Convention and is entitled to the benefits of the Convention shall be considered
to own the voting stock of NioCorp owned by an entity that is considered fiscally transparent under the laws of the United States
and that it is not a resident of Canada, in proportion to the Company’s ownership interest in that entity.
Warrants
The material terms and provisions of the Warrants
are summarized below.
Each Selling Shareholder
Warrant entitles the holder to purchase one Common Share for an exercise price equal to C$0.85 per Common Share. Subject to certain
limitations as described below, the Warrants are immediately exercisable upon issuance and expire 36 months from the Closing Date.
Each Compensation Warrant
entitles the holder to purchase one Common Share for an exercise price equal to C$0.65 per Common Share. Subject to certain limitations
as described below, the Warrants are immediately exercisable upon issuance and expire 36 months from the Closing Date.
The exercise price per
common share and the number of common shares issuable upon exercise of the Warrants is subject to adjustment upon the occurrence
of certain events including, but not limited to, the following:
• the subdivision
or re-division of the Company’s outstanding Common Shares into a greater number of Common Shares;
• the reduction,
combination or consolidation of the Company’s outstanding Common Shares into a lesser number of Common Shares;
• the issuance
of Common Shares or securities exchangeable for, or convertible into, Common Shares to all or substantially all of the holders
of Common Shares by way of stock dividend or other distribution (other than a distribution of Common Shares upon the exercise of
Warrants or any outstanding options);
• the reorganization
of the Company or the consolidation or merger or amalgamation of the Company with or into another body corporate; and
• a reclassification
or other similar change to the Company’s outstanding Common Shares.
Upon the holder’s
exercise of a Warrant, we will issue the Common Shares issuable upon exercise of the Warrant within five (5) business days following
our receipt of notice of exercise and payment of the exercise price, subject to surrender of the Warrant. Prior to the exercise
of any Warrants to purchase Common Shares, holders of the Warrants will not have any of the rights of holders of the Common Shares
purchasable upon exercise, including the right to vote or to receive any payments of dividends on the Common Shares purchasable
upon exercise.
As of June 1, 2017,
an aggregate of 20,609,086 warrants, with each warrant convertible into one (1) Common Share, were issued and outstanding as
follows:
Number
|
|
|
Exercise Price
|
|
|
Expiry Date
|
|
3,125,000
|
|
|
C$
|
0.72
|
|
|
December 22, 2018
|
|
9,150,285
|
|
|
C$
|
0.75
|
|
|
January 19, 2019
|
|
3,860,800
|
|
|
C$
|
0.85
|
|
|
February 14, 2020
|
|
2,964,682
|
|
|
C$
|
0.85
|
|
|
February 21, 2020
|
|
617,649
|
|
|
C$
|
0.85
|
|
|
February 28, 2020
|
|
890,670
|
|
|
C$
|
0.90
|
|
|
March 31, 2020
|
|
20,609,086
|
|
|
|
|
|
|
|
Each of the foregoing
warrants provides that in the event there is a subdivision, consolidation, reclassification, or other change of the Common Shares
into a greater or lesser number of Common Shares or other securities of NioCorp, the terms of the Common Shares issuable on conversion
of such warrants and the exercise price of such warrants will be adjusted accordingly.
Convertible Securities
Convertible Notes
On October 14, 2015, NioCorp
issued unsecured convertible promissory notes in the aggregate principal amount of $0.8 million (the “Notes”).
The Notes bear interest
at a rate of 8%, payable quarterly in arrears, are nontransferable, and have a term of three years from the date of issue. Principal
under the Notes is convertible by lenders into, and payable by NioCorp in, Common Shares at a conversion price of C$0.97 per Common
Share, calculated on conversion or repayment using the then-current Bank of Canada noon exchange rate. Accrued but unpaid interest
on the Notes will be convertible by lenders into, and payable by NioCorp in, Common Shares at a price per Common Share equal to
the most recent closing price of NioCorp’s Common Shares on the TSX prior to the delivery to NioCorp of a request to convert
interest, or the due date of interest, as applicable, calculated using the then-current Bank of Canada noon exchange rate. Interest
payable and any unconverted principal at maturity date is payable either in cash or Common Shares, at the election of NioCorp.
Conversion of any interest is subject to further TSX approval.
Each Note provides that
in the event there is a subdivision, consolidation, reclassification, or other change of the Common Shares into a greater or lesser
number of Common Shares or other securities of NioCorp, the terms of the Common Shares issuable on conversion of the Notes and
the price of such Common Shares will be adjusted accordingly.
The Notes become due in
accordance with their terms on October 14, 2018.
Lind Convertible Securities
On December 14, 2015,
NioCorp entered the Lind Agreement. A first tranche $4.5 million was made in a series of advances between December 22, 2015 and
January 19, 2016, pursuant to the issuance of an initial convertible security with a face value of $5.4 million during the same
period (the “Initial Convertible Security”).
The Initial Convertible
Security has a two-year term from the date of issue and will incur a simple interest rate obligation of 10%, prepaid and attributed
to its face value. The Initial Convertible Security is secured by assets of NioCorp. Lind is entitled to convert the Initial Convertible
Security in monthly instalments over its term at a price per share equal to 85% of NioCorp’s five-day trailing VWAP prior
to the date that notice of conversion is provided by Lind. The Lind Agreement contains restrictions on how much of the Initial
Convertible Security may be converted in any particular month. NioCorp has the option to buy back up to 70% of the Initial Convertible
Security in cash at any time for a nominal premium. Lind is entitled to accelerate its conversion right to the full amount of the
face value of the Initial Convertible Security or demand repayment thereof in cash upon a default and other designated events.
Lind is entitled to increase
the financing under the Initial Convertible Security by an additional $1.0 million during its two-year term and, provided certain
conditions are met, NioCorp will have the right to call the additional $1.0 million First Tranche Increase. The Lind Agreement
also provides for the issuance of a second convertible security on mutual agreement of NioCorp and Lind and completion of certain
conditions, through which Lind may finance up to another $1.0 million - $6.0 million convertible Security (the “Second Tranche”),
which Lind would be entitled to subsequently increase by up to 20% in its sole discretion (the “Second Tranche Increase”).
Assuming a full First Tranche Increase, Second Tranche and Second Tranche Increase, the total amount (including interest) that
may be advanced by Lind under the Lind Agreement is $16,440,000.
In respect of the Second
Tranche (if any), NioCorp has agreed to issue a number of warrants as is equal to (N), determined pursuant to the following formula:
|
·
|
(the Second Tranche amount / VWAP per share during the five consecutive trading days immediately
before the closing date of the Second Tranche) X 0.50 = N (the “Second Warrants”)
|
On the occurrence of a
First Tranche Increase (if any), NioCorp has agreed to issue a number of warrants as is equal to (N), determined pursuant to the
following formula:
|
·
|
($1,000,000 / VWAP per share during the five consecutive trading days immediately before the closing
date of the First Tranche Increase) X 0.50 = N (the “First Tranche Increase Warrants”)
|
On the occurrence of a
Second Tranche Increase (if any), NioCorp has agreed to issue a number of warrants as is equal to (N), determined pursuant to the
following formula:
|
·
|
((the Second Tranche Increase amount X 0.20) / VWAP per share during the five consecutive trading
days immediately before the closing of the Second Tranche Increase) X 0.50 = N (the “Second Tranche Increase Warrants”)
|
Warrants which may become
issuable under the Lind Agreement will be priced as follows:
|
·
|
Second Warrants: 120% of the five day VWAP of the Common Shares before the Second Tranche closing.
|
|
·
|
First Tranche Increase Warrants: 120% of the five day VWAP of the Common Shares before the First
Tranche Increase closing.
|
|
·
|
Second Tranche Increase Warrants: 120% of the five day VWAP of the Common Shares before the Second
Tranche Increase closing.
|
On February 14, 2017, upon satisfaction
of the conditions for the First Tranche Increase, the Company provided notice to Lind to demand the advancement of the additional
$1.0 First Tranche Increase. As a result, upon payment of the additional $1.0 million in funding by Lind to the Company, the face
amount of the Initial Convertible Security will be increased by $1.2 million ($1.0 million in additional funding and $200,000 in
implied interest amount). In connection with the First Tranche Increase, the Company is obligated to issue Lind First Tranche Increase
Warrants. The First Tranche Increase Warrants will have a term of 36 months from issuance, and the number of First Tranche Increase
Warrants to be issued will be equal to $1.0 million divided by the VWAP for the five (5) consecutive trading days immediately before
the Convertible Security Increase funding is received, multiplied by 0.5. The exercise price of the First Tranche Increase Warrants
issuable in connection with First Tranche Increase will be equal to 120% of the Company’s five (5) trading day VWAP per share
immediately prior to the date the First Tranche Increase is received.
On March 31, 2017, Lind funded the
First Tranche Increase and in connection therewith the Company issued 890,670 First Tranche Increase Warrants, each entitling Lind
to acquire one Common Share at a price of C$0.90 until March 31, 2020.
The foregoing is intended as a description
of the material terms of the Lind Agreement only, and is qualified in its entirety by reference to the Lind Agreement itself. Please
refer to the full text of the Lind Agreement, filed as an exhibit to the registration statement of which this prospectus forms
a part. See “Where You Can Find Additional Information” below.
Incentive Stock Options
As of June 1, 2017, an
aggregate of 16,605,000 incentive stock options are issued and outstanding, with each option exercisable into one (1) Common Share,
as follows:
Option Grant Date
|
|
Option
Exercise Price
|
|
|
Option Expiry Date
|
|
Number of Options
Currently Outstanding
|
|
March 6, 2017
|
|
C$
|
0.76
|
|
|
March 6, 2022
|
|
|
5,650,000
|
|
July 21, 2016
|
|
C$
|
0.94
|
|
|
July 21, 2021
|
|
|
710,000
|
|
January 19, 2016
|
|
C$
|
0.62
|
|
|
January 19, 2021
|
|
|
5,275,000
|
|
April 28, 2015
|
|
C$
|
0.94
|
|
|
April 28, 2018
|
|
|
500,000
|
|
December 22, 2014
|
|
C$
|
0.80
|
|
|
December 22, 2017
|
|
|
2,720,000
|
|
September 2, 2014
|
|
C$
|
0.76
|
|
|
September 2, 2017
|
|
|
500,000
|
|
July 28, 2014
|
|
C$
|
0.65
|
|
|
July 28, 2017
|
|
|
1,250,000
|
|
|
|
|
|
|
|
|
|
|
16,605,000
|
|
Each agreement in respect
of the foregoing incentive stock options provides that in the event there is a subdivision, consolidation, reclassification, or
other change of the Common Shares into a greater or lesser number of Common Shares or other securities of NioCorp, the terms of
the Common Shares issuable on exercise of such options and the exercise price of such options will be adjusted accordingly. Furthermore,
the expiry period of each of the foregoing options will be accelerated in the event the holder ceases to hold their applicable
position as director, officer, consultant, or employee of NioCorp.
Registration Rights
On February 14 and
28, 2017, in connection with the closing of the Company’s offering of units, the Company granted registration rights to
the investors in such offering. Under the registration rights, the Company has agreed to use its commercially reasonable
efforts to file a registration statement with the United States Securities and Exchange Commission under the Securities Act
registering the resale by the investors in such offering of the common shares underlying the units and the common
shares issuable upon exercise of the warrants and to bring such registration statement effective as soon as possible
thereafter. The Company further agreed to use its commercially reasonable efforts to maintain the registration statement or
post-effective amendment thereto effective until the earlier of the date (i) all of the registrable securities have been sold
pursuant to such registration statement or Rule 144, if available, or (ii) three years from the effective date. The
Company’s agreement does not provide for any penalties or other payments or the issuance of additional securities
should the Company not file or bring a registration statement effective or fail to maintain the effectiveness of the
registration statement.
Business
General Corporate Information
NioCorp was incorporated
under the laws of the Province of British Columbia under the Business Corporations Act (British Columbia) on February 27, 1987
under the name “IPC International Prospector Corp”. On May 22, 1991, we changed our name to “Kingston Resources
Ltd”. On June 29, 2001, we changed our name to “Butler Developments Corp”. On February 12, 2009, we changed our
name to “Butler Resource Corp”. On March 4, 2010, we changed our name to “Quantum Rare Earth Developments
Corp”. On March 4, 2013, we changed our name to “NioCorp Developments Ltd”.
NioCorp is a reporting
issuer in British Columbia, Alberta, Saskatchewan, Ontario, and New Brunswick. Our registered and records office is located at
595 Burrard Street, Suite 2600, Vancouver, British Columbia V7X 1L3 (ATTN: Blake, Cassels & Graydon LLP). Our head office is
located at 7000 South Yosemite Street, Suite 115, Centennial, Colorado 80112.
Historical Development of the Business
During 2009 and 2010,
the Company commenced mineral exploration activities in the Elk Creek area, including negotiations with local landowners for land
access agreements. The option agreements between ECRC and individual landowners were in the form of five-year pre-paid Exploration
Lease Agreements, with an Option to Purchase (“OTP”) the mineral and/or surface rights during the term of the option.
The agreements granted the Company an exclusive right to explore and evaluate the landowner’s property for a period of 60
months. These agreements expired in 2014 and 2015, as the case may be, and a number have been extended or renegotiated for additional
60 month terms. Please see the section heading “Item 2 -Properties” below for additional information on the current
status of the land access agreements. The acquisition of the Elk Creek Project by the Company involved the purchase of all of the
issued and outstanding common shares of 859404 BC Ltd. (“859404”), a private British Columbia company, which in turn
held 100% of the issued and outstanding shares of ECRC, which was signatory to the option agreements. A new Canadian company, 0886338
BC Ltd. was formed to merge with 0859404, and this merged entity was subsequently amalgamated into 0896800.
Following the completion
of land negotiations, the Company commenced a field exploration program in 2011 which included verification of previous work that
was completed on the property in the 1970s and 1980s, re-assaying of historic drill core, an airborne geophysical survey and the
completion of 5 new diamond drill holes. The available data for the property was compiled into an updated NI 43-101 resource estimate
for the project, which was issued in April 2012. Additional drilling and NI 43-101 technical reports were completed by the Company
in 2014 and 2015.
The majority of the
historic drilling at the project site from the 1970s and 1980s was completed by Molycorp, a subsidiary of Union Oil Company of
California (Unocal). Molycorp wound up its mineral exploration activities in the early 1990s and dissolved its Nebraska subsidiary,
Molycorp Nebraska LLC, in the early 2000s. The diamond drill core generated during Molycorp’s drilling activities was subsequently
donated to the University of Nebraska – Lincoln and was stored at that university’s drill core storage facility near
Mead, Nebraska.
Loss of Foreign Private Issuer Status under U.S. Securities
Laws
Based on our analysis
of the number of Common Shares held by persons resident in the United States as of December 31, 2015, as well as the majority
of our assets, officers, and directors being in the United States, we did not meet the definition of a “foreign private issuer”
under Rule 405 of the Securities Act and as a result, effective July 1, 2016 we became subject to United States securities
laws as applicable to a United States domestic company for our fiscal year ending June 30, 2017. Further, based on our analysis
on March 31, 2017, we will remain subject to the reporting requirements of a domestic issuer for the coming fiscal year ending
June 30, 2018.
You may read and copy
any materials we file with the SEC in the SEC’s Public Reference Room, 100 F Street N.E., Washington, D.C. 20549. You may
obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains
an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically
with the SEC, which can be found at http://www.sec.gov.
Emerging Growth Company Status
We qualify as an “emerging
growth company” as defined in Section 101 of the Jumpstart our Business Startups Act (“JOBS Act”) as we do not
have more than $1.07 billion in annual gross revenue and did not have such amount as of June 30, 2016, being the last day of our
fiscal year.
We may lose our status
as an emerging growth company on the last day of our fiscal year during which (i) our annual gross revenue exceeds $1.07 billion
or (ii) we issue more than $1.0 billion in non-convertible debt in a three-year period. We will lose our status as an emerging
growth company if at any time we are deemed to be a large accelerated filer. We will lose our status as an emerging growth company
on the last day of our fiscal year following the fifth anniversary of the date of the first sale of common equity securities pursuant
to an effective registration statement.
As an emerging growth
company under the JOBS Act, we have elected to opt out of the extended transition period for complying with new or revised standards
pursuant to Section 107(b) of the Act. The election is irrevocable.
As an emerging growth
company, we are exempt from Section 404(b) of the Sarbanes-Oxley Act of 2002 and Section 14A(a) and (b) of the Securities Exchange
Act of 1934 (the “Exchange Act”). Such sections are provided below:
|
·
|
Section 404(b) of the Sarbanes-Oxley Act of 2002 requires a public company’s auditor to attest
to, and report on, management’s assessment of its internal controls.
|
|
·
|
Sections 14A(a) and (b) of the Exchange Act, implemented by Section 951 of the Dodd-Frank Act,
require companies to hold shareholder advisory votes on executive compensation and golden parachute compensation.
|
As long as we qualify
as an emerging growth company, we will not be required to comply with the requirements of Section 404(b) of the Sarbanes-Oxley
Act of 2002 and Section 14A(a) and (b) of the Exchange Act.
Geographic and Segment Information
We have one reportable
segment, consisting of evaluation, acquisition, exploration and, if warranted, development activities which are focused principally
in Nebraska, U.S.A. We reported no material revenues during our fiscal years ended 2015 and 2016, or during the nine month period
ended March 31, 2017.
Corporate Structure
The Company’s
business operations are conducted primarily through ECRC. The below table provides an overview of the Company’s current subsidiaries
and their activities.
Name
|
|
State/Province of
Formation
|
|
Ownership
|
|
Business
|
0896800 B.C. Ltd.
|
|
British Columbia
|
|
100%
by the Company
|
|
The only business of 0896800 is to hold the shares of ECRC
|
Elk Creek Resources Corp.
|
|
Nebraska
|
|
100%
by 0896800
|
|
The business of ECRC is the development of the Elk Creek Project
|
Business Operations
NioCorp, through ECRC,
is developing a superalloy materials project that, if and when developed, will produce niobium, scandium, and titanium products.
Known as the “Elk Creek Project”, it is located near Elk Creek, Nebraska, in the southeast portion of the state.
|
·
|
Niobium is used to produce various superalloys that are extensively used in high performance aircraft
and jet turbines. It also is used in HSLA steel, a stronger steel used in automotive, bridges, structural systems, buildings, pipelines,
and other applications that generally enables those applications to be stronger and lighter in mass. This “lightweighting”
benefit often results in environmental benefits, including reduced fuel consumption and material usage, which can result in fewer
air emissions.
|
|
·
|
Scandium can be combined with aluminum to make super-high-performance alloys with increased strength
and improved corrosion resistance. Scandium also is a critical component of advanced solid oxide fuel cells, an environmentally
preferred technology for high-reliability, distributed electricity generation.
|
|
·
|
Titanium is a component of various superalloys and other applications that are used for aerospace
applications, weapons systems, protective armor, medical implants and many others. It also is used in pigments for paper, paint,
and plastics.
|
Our primary business
strategy is to advance our Elk Creek Project to commercial production. We are focused on obtaining additional funds to carry out
our near-term planned work programs to complete a feasibility study for the Elk Creek Project and to begin development. Subject
to delivering a positive feasibility study for the Elk Creek Project, we intend to secure the project financing necessary to complete
mine development and construction of the Elk Creek Project.
NioCorp is a mineral
exploration company engaged in the acquisition, exploration, and development of mineral properties. We are in the exploration stage
as our properties have not yet reached commercial production and none of our properties is beyond the exploration stage at this
time. All work presently planned by us is directed at defining mineralization and increasing understanding of the characteristics
of, and economics of, that mineralization. In addition, we have also conducted permitting, land reclamation, and other related
activities at and for the Elk Creek Project.
As noted above, the
Company conducts its business operations and holds assets primarily through its subsidiary entities. The following describes the
operations and assets of NioCorp’s subsidiaries through which NioCorp conducts its business operations.
Elk Creek Project
As of the date of
this prospectus, the Company’s material mineral property is the Elk Creek Property. NioCorp’s interest in the Elk Creek
Project is held pursuant to exploration lease and option agreements between the Company’s subsidiary, ECRC, and individual
Nebraskan landowners (the “Elk Creek Leases”). The Elk Creek Leases held by ECRC comprise a series of agreements with
individual property owners in the form of a five-year pre-paid lease on the underlying mineral and/or surface rights. The agreements
contain a pre-determined buyout figure for permanent ownership of the mineral rights, and in certain instances, include an option
to acquire surface rights. The option to exercise the purchase option lies entirely with the Company. All Elk Creek Leases that
cover the mineral resource associated with the project were renegotiated during the fiscal year ended June 30, 2015, on substantially
identical terms, for a period of five years.
After filing the initial
Preliminary Economic Assessment on the Elk Creek Project (“PEA”) on May 19, 2015, the Company engaged in additional
bench and pilot testing of the metallurgical flowsheet for the proposed plant. During this testing, it was determined that recoveries
of targeted elements could be significantly increased by eliminating the flotation step and processing the resource directly through
a hydrometallurgical process. The discovery of this positive change to the flowsheet prompted the Company’s decision to prepare
a new Preliminary Economic Assessment. These changes are expected to allow the Company to recover significantly higher percentages
of all three elements from the mineral resource, including niobium recovery of 89.2%, scandium recovery of 90.0%, and titanium
recovery of 87.6%. This in turn will reduce the volume of the resource required to be mined on a daily basis and enable the Company
to achieve the same level of ferroniobium and titanium dioxide production, as was noted in the Company’s initial PEA, while
increasing scandium trioxide output by approximately 661%. These changes result in minimal increases to CAPEX, compared to the
initial PEA. On August 4, 2015, the Company announced the completion of a second PEA for the Elk Creek Project, and the related
technical report was filed in Canada on SEDAR on September 4, 2015, which was amended and re-filed in response to comments from
the BCSC on October 16, 2015 (the October 2015 PEA). The October 2015 PEA reflects the impacts of the changes to the metallurgical
flowsheet described above, additional information available regarding the hydrogeologic conditions at the project site, and the
completion of third-party market studies for ferroniobium and scandium trioxide. The October 2015 PEA retains the technical and
economic results previously disclosed by NioCorp in its August 4, 2015 and September 4, 2015 news releases, and included
additional guidance and cautionary language required by NI 43-101 regarding uncertainty in realizing the results of the October
2015 PEA.
In addition to the
underground mine, facilities described in the October 2015 PEA also include a crushing and grinding operation. The ground material
will be fed to a hydrometallurgical operation that will produce a niobium precipitate, a scandium trioxide co-product as well as
a Titanium dioxide by-product. A final pyrometallurgical step will convert the niobium precipitate to ferroniobium using an aluminothermic
reduction process. In order to support these processing steps, a number of ancillary facilities would be constructed, including
stockpile areas, water pumping and treatment facilities, reagent and fuel storage areas, warehousing, utility installations, rail
infrastructure, office space, and a tailings impoundment. The underground mine would be accessed by a shaft and mined using longhole
stoping methods supported by a mine backfill plant located on the surface.
Recent Corporate Developments
On May 16,
2017, we entered into the Underwriting Agreement, subject to regulatory approval, with Mackie, pursuant to which Mackie has
agreed to purchase, on a bought deal short form prospectus basis, 3,077,000 Units at a price of C$0.65 per Unit, subject to
the Overallotment Option to increase the size of the Private Placement by up to 15% in Units. Each Unit will consist of
one Common Share and one Selling Shareholder Warrant, with each Selling Shareholder Warrant entitling the holder to acquire
one Common Share at a price of C$0.85 at any time prior to the date which is 36 months following the Closing Date.
This prospectus assumes that Mackie will exercise the Overallotment Option in full on the Closing Date. As a
result, we expect to issue an aggregate of 3,538,550 Units on the Closing Date in connection with the Private Placement. In
connection with the closing of the Private Placement and assuming the full exercise of the Overallotment Option on the
Closing Date, Mackie will also receive 230,005 Compensation Warrants, with each Compensation Warrant entitling the holder to
acquire one Common Share at a price of C$0.65 at any time prior to the date which is 36 months from the Closing Date. Pursuant to the Underwriting Agreement, the settlement of the Private Placement, and our receipt of the net
proceeds therefrom, will not occur until the registration statement to which this prospectus relates is declared effective by the
SEC.
On April 21, 2017,
our resale registration statement on Form S-1 (“April 2017 S-1”) filed on April 12, 2017, was declared effective by
the SEC. The April 2017 S-1 permits selling securityholders of units of the Company issued in our February 2017 Offering (as defined
below) who registered the resale of Common Shares underlying such units in the April 2017 S-1 and Lind, with respect to Common
Shares issuable upon exercise of the 890,670 Lind First Tranche Increase Warrants and upon conversion of $1.2 million of principal
amount of convertible notes held by it, to avoid potentially indefinite hold periods on such Common Shares under U.S. federal securities
laws. NioCorp will not receive any proceeds from the sale of the Common Shares registered pursuant to the April 2017 S-1 and will
only receive the exercise price of the applicable securities upon exercise of such securities.
On March 31, 2017,
we received $1.0 million in First Tranche Increase funding from Lind. In connection with this additional funding, the Company issued
890,670 Lind First Tranche Increase Warrants, at an exercise price of C$0.90 per warrant.
On March 24, 2017,
we announced that we had entered into an amending agreement dated March 20, 2017, with Lind to extend the term of the Initial Convertible
Security by six months to June 17, 2018, and entered into amending agreements dated March 20, 2017, with Mark Smith to extend the
due dates of the Smith Credit Agreement and Original Smith Loan to June 16, 2018 and June 17, 2018, respectively.
On February 28, 2017,
we completed the second and final tranche closing (the “Final Closing”) of our non-brokered private placement of units
announced January 27, 2017, January 30, 2017, and February 10, 2017 (the “February 2017 Offering”). The Final
Closing consisted of the issuance of 3,503,989 units consisting of 2,964,682 units dated February 21, 2017 (each a “February
21, 2017 Unit”) and 539,307 units dated February 28, 2017 (each a “February 28, 2017 Unit”) at a price of
C$0.70 per each February 21, 2017 and February 28, 2017 Unit, for gross aggregate proceeds of C$2.5 million. Each February 21,
2017 Unit consists of one Common Share and one transferable Common Share purchase warrant (each whole such warrant a “February
22, 2017 Warrant”), with each February 21, 2017 Warrant entitling the holder thereof to acquire one additional Common
Share at a price of C$0.85 until February 21, 2020. Each February 28, 2017 Unit consists of one Common Share and one transferable
Common Share purchase warrant (each whole such warrant a “February 28, 2017 Warrant”), with each February 28,
2017 Warrant entitling the holder thereof to acquire one additional Common Share at a price of C$0.85 until February 28, 2020.
The Company paid cash commissions of C$87,527 and issued 78,342 broker warrants (having the same terms as the Warrants) in connection
with the Private Placement to brokers outside of the United States.
On February 21, 2017,
we announced that, further to our existing Convertible Security with Lind, the Company had provided Lind with its First Tranche
Increase demand, pursuant to which the Company called an additional $1.0 million in funds from Lind under the Lind Agreement. NioCorp
is entitled to demand the First Tranche Increase pursuant to the terms of the Lind Agreement.
The First Tranche
Increase funds are required to be delivered by Lind to the Company within 30 trading days, will have a term of two years and bear
prepaid interest at a rate of 10% per annum. In connection with the First Tranche Increase, the Company is obligated to issue Lind
First Tranche Increase Warrants. The First Tranche Increase Warrants will have a term of 36 months from issuance, and the number
of First Tranche Warrants to be issued will be equal to $1.0 million divided by the VWAP for the five (5) consecutive trading days
immediately before the First Tranche Increase funding is received, multiplied by 0.5. The exercise price of the First Tranche Increase
Warrants issuable in connection with the First Tranche Increase will be equal to 120% of the Company’s five (5) trading day
VWAP per share immediately prior to the date the First Tranche Increase funding is received.
On February 14, 2017,
we completed the First Tranche Closing of our February 2017 Offering. The First Tranche Closing consisted of the issuance of 3,860,800
February 14, 2017 Units at a price of C$0.70 per Unit, for gross proceeds of C$2.7 million. Each February 14, 2017 Unit consists
of one Common Share and one transferable Common Share purchase warrant (each whole such warrant a “February 14, 2017 Warrant”),
with each February 14, 2017 Warrant entitling the holder thereof to acquire one additional Common Share at a price of C$0.85
until February 14, 2020. On February 10, 2017, we announced that the final increase to the maximum gross proceeds of our February
2017 Offering to C$4.75 million from the original maximum of C$2.0 million.
On February 7, 2017,
we announced a second increase in the maximum gross proceeds of the February 2017 Offering to C$4.0 million from the original maximum
of C$2.0 million.
On January 30, 2017,
the Company announced that, further to its January 27, 2017 announcement regarding the February 2017 Offering, due to strong investor
demand it has increased the maximum gross proceeds of the Private Placement from C$2.0 million to C$2.5 million.
On January 27, 2017,
the Company announced the C$2.0 million February 2017 Offering for up to 2,857,143 units at a price of C$0.70 per unit. Each such
unit to consist of one Common Share and one transferable Common Share purchase warrant, with each such warrant to be exercisable
to acquire one additional Common Share of the Company for a period of 36 months at a price of C$0.85 per Common Share.
On January 16, 2017,
we entered into the Smith Credit Agreement in the amount of $2.0 million with Mark Smith. The Smith Credit Agreement bears an interest
rate of 10% and its drawdowns are subject to a 2.5% establishment fee. Amounts outstanding under the Smith Credit Agreement will
become due January 16, 2018, and are secured by all of the Company’s assets pursuant to a general security agreement between
the Company and Mr. Smith dated June 17, 2015. The Smith Credit Agreement contains financial and non-financial covenants
customary for a facility of this size and nature. On January 18, 2017, we completed a drawdown from the Smith Credit Agreement
in the amount of $175.
On October 14, 2016,
we announced that NioCorp’s resale registration statement on Form S-1 (“S-1”) filed on September 2, 2016,
as amended September 22, 2016, was brought effective by the SEC. The S-1 permits selling securityholders of Common Share purchase
warrants (“Selling Securityholders”) who registered the resale of Common Shares issuable upon exercise of such warrants
in the S-1 to avoid potentially indefinite hold periods on the Common Shares under U.S. federal securities laws. NioCorp will not
receive any proceeds from the sale of the Common Shares by Selling Securityholders and will only receive the exercise price of
the warrants upon exercise of such warrants.
On July 11, 2016,
we announced the completion of our warrant exercise program for gross proceeds to us of C$4.8 million. A total of approximately
7.04 million C$0.65 share purchase warrants expiring November 10, 2016 were exercised during this program. Each holder who exercised
one warrant during the program received 1.11029 Common Shares, representing one warrant share and 0.11029 of a Common Share, as
the incentive portion. The program had been previously approved by our shareholders on May 17, 2016.
On July 1, 2016, we
appointed Neal Shah as our Chief Financial Officer. Mr. Shah had served as our Interim Chief Financial Officer since April
of 2015. Prior to that, he was our Vice President of Finance.
On June 20, 2016,
we announced that we had entered into a joint development agreement with IBC Advanced Alloys Corp. to investigate and develop applications
for scandium-containing alloys for multiple downstream markets.
On January 19, 2016,
we announced the closing of our non-brokered private placement of equity units. We received gross proceeds of C$5,247,485 through
the issuance of 9,074,835 Units at a price of C$0.57 per unit. Each Unit warrant entitles the holder to acquire a Common Share
at a price of C$0.75 for a period of three years from their date of issuance.
On January 29, 2016,
the Company announced that Tony Fulton resigned from the NioCorp Board of Directors, effective immediately, as a result of his
confirmation by the Nebraska Legislature to serve as Nebraska Tax Commissioner. Subsequently, on February 23, 2016, the Company’s
shareholders approved a motion appointing Anna Castner Wightman of Omaha, Nebraska, to the Company’s Board of Directors.
A sixth generation Nebraskan and a graduate of Nebraska Wesleyan University, Ms. Wightman currently serves as Vice President
of Government Relations for First National Bank in Omaha, Nebraska, and served on the Boards of Directors of the Nebraska Chamber
of Commerce, Rose Theater for Performing Arts, and Joslyn Castle.
On December 23, 2015,
we announced that we had received conditional approval from the TSX for the Lind Agreement. We also announced that we received
an initial $3.0 million in first tranche funding from Lind. In addition to the $3.0 million transferred on December 23, 2015, an
additional $1.0 million was transferred on December 30, 2015 and an additional $500,000 was received as of January 19, 2016.
Lind can increase the funding under the Lind Agreement by an additional $1.0 million during its two-year term. Further, provided
certain conditions are met, we will have the right to call an additional $1.0 million under the Lind Agreement. The Lind Agreement
also provides for the issuance of a second convertible security on mutual agreement of us and Lind, in which Lind would fund up
to another $6.0 million (the “Second Tranche”), which can also be increased by $1.0 million.
On October 22, 2015,
we announced that we had closed a non-brokered private placement of unsecured convertible promissory notes for $0.8 million. The
convertible promissory notes bear interest at a rate of 8%, are payable quarterly in arrears, are non-transferable, and have a
term of three years from the date of issue. Principal under the convertible promissory notes was repayable by us in cash or Common
Shares at a conversion price of C$0.97 per Common Share, calculated on conversion or repayment using the then-current Bank of Canada
noon exchange rate. Accrued but unpaid interest on the convertible promissory notes was payable by us in cash or Common Shares
at a price per Common Share equal to the most recent closing price of our Common Shares prior to the delivery to us of a request
to convert interest, or the due date of interest, as applicable, calculated using the then-current Bank of Canada noon exchange
rate.
On November 28, 2014,
NioCorp entered into a sponsorship engagement agreement with MRCC, pursuant to which MRCC had agreed to assist and sponsor the
Company for a listing on a senior North American stock exchange. In consideration for its services, MRCC was paid a cash fee and
issued 250,000 non-transferable compensation options (the “Compensation Options”). Each Compensation Option entitled
MRCC to acquire one unit of the Company (a “MRCC Comp Unit”) at an exercise price equal to C$0.60 at any time up to
January 14, 2017. Each MRCC Comp Unit consists of one Common Share and one full Common Share purchase warrant (a “MRCC Comp
Warrant”). Each MRCC Comp Warrant entitled MRCC to acquire one additional Common Share at an exercise price equal to C$0.65
at any time up to January 14, 2017.
On July 31, 2014,
NioCorp entered into a financial advisory agreement to engage MRCC to assist in reviewing strategic options to meet NioCorp’s
growth objectives and enhance shareholder value. NioCorp executed a subsequent advisory agreement with MRCC on November 17, 2014
(the “Current Advisory Agreement”) to replace and supersede the agreement of July 31, 2014. Pursuant to the Current
Advisory Agreement, MRCC will assist NioCorp in the preparation of presentation marketing materials, provide strategic guidance
through NioCorp’s next stage of development, and expose NioCorp to MRCC’s network of retail and institutional investors.
As consideration under
the Current Advisory Agreement, NioCorp paid MRCC a work fee (the “Work Fee”) of C$190,000 (plus applicable taxes)
and issued MRCC 750,000 broker warrants (the “Broker Warrants”) for a work period commencing effective August 1, 2014
and ending April 31, 2015. Each Broker Warrant entitled MRCC to acquire one unit of the Company (a “MRCC Unit”) at
an exercise price equal to C$0.55 at any time up to December 4, 2016. Each MRCC Unit consisted of one Common Share and one
full Common Share purchase warrant (a “MRCC Warrant”). Each MRCC Warrant entitled MRCC to acquire one additional Common
Share at an exercise price equal to C$0.65 at any time up to December 4, 2016.
Elk Creek Project Update
On June 1, 2017, we announced that elements of the Feasibility Study
related to engineering and materials characterization work have recently increased beyond earlier estimates. We now estimate that
the total cost of completing the Feasibility Study has increased by approximately $0.8 million above the estimate provided in our
financial statements for the quarter ended March 31, 2017. Total estimated cost of the Feasibility Study is approximately $33 million,
of which approximately $32 million had been spent as of March 31, 2017. We also announced that results from our mine backfill material
testing program have demonstrated backfill strengths that exceeded the design criteria set as part of the Elk Creek mine design.
Backfill testing is the final material testing program required prior to release of the Feasibility Study. Updates to capital expenditure
and operating expenditure estimates included in the October 2015 PEA, however, depend upon a number of factors and will not be
determined until all remaining work is complete on the Feasibility Study. In addition, we announced that we have been notified
by the USACE that additional authorization will be required under Section 14 of the Rivers and Harbors Appropriations Act (33 USC
408) (Section 408) for the mine water outfall mechanism in the Missouri River. The 408 authorization only involves the outfall
structure itself, and not the waterline’s discharged water, which is governed by State of Nebraska permitting authorities.
The 408 authorization may require a case-specific environmental analysis, such as an EA or an EIS, or it may be able to proceed
under categorical exclusion provisions in the USACE’s Section 408 program, which would not require completion of either an
EA or an EIS. We are working with the USACE to determine how to most efficiently proceed with this permitting process.
On April 10, 2017,
we announced that we had reached agreement with private landowners on the final land parcel needed prior to completion of a feasibility
study for our Elk Creek Project. The perpetual easement between NioCorp and the land owners is for a land parcel at the terminus
of the Company’s proposed waterline to the Missouri River from its Elk Creek property. The easement facilitates the shortest
route for the waterline between the property and the Missouri River, which helps to cut costs, reduce the Elk Creek Project’s
environmental footprint, and furthers the Company’s goal of minimizing impacts to federally regulated wetlands and stream
channels.
On March 30, 2017,
we announced the submission of a Pre-Construction Notification (PCN) permit application to the USACE for the proposed waterline
from the Elk Creek Project to the Missouri River. The PCN filed by NioCorp with the USACE covers the outfall structure portion
of the Project’s waterline in the Missouri River. Under current federal law (40CFR330.1 (e)), NioCorp may presume that the
PCN qualifies for the USACE’s Nationwide Permit 12 (Utility Line Activities) unless it is notified by the USACE within 45
calendar days. If the USACE notifies NioCorp that the notification is incomplete, one additional 45-day period commences upon receipt
of the revised notification. The remainder of the proposed 33-mile waterline is able to move forward under non-notifying parameters
of Nationwide Permit 12, given that it involves no permanent impacts to wetlands and stream channels and will have only temporary
impacts during construction. Additionally, the proposed underground mine, surface processing facilities, and tailings impoundment
are estimated to result in zero permanent impacts to any federally jurisdictional waters, and thus will need no discretionary permit
from the USACE. The USACE responded to the March 24, 2017 PCN notice with a series of questions on April 7, 2017. The Company
responded to the USACE and provided additional information on May 5, 2017, which started the second and final 45-day review period
for this permit. As such, the Company expects to receive authorization, on or before June 19, 2017, for construction of the mine
and surface facilities along with all of the Project’s proposed 33-mile waterline from the Project site to the Missouri River
except the mine water outfall mechanism to be located in the River. Further, the Company has been notified by the USACE that the
mine water outfall mechanism will be subject to an additional authorization under Section 14 of the Rivers and Harbors Appropriations
Act (33 USC 408) (“Section 408”). The Company is currently working with the USACE to determine the requirements for
the Section 408 process. The Company understands that the PCN process for the mine water outfall mechanism will be deemed complete
once the Section 408 authorization has been obtained.
On March 27, 2017,
the Company announced the successful production of high-purity 99.9% commercial grade Scandium Trioxide from its Elk Creek, Nebraska
resource and that it has finalized plans for the proposed Scandium purification circuit to be used at its Elk Creek Project. We
also announced that we anticipate public release of the results of the Elk Creek Feasibility Study in the second calendar quarter
of 2017. Following the release of the Feasibility Study, the Company intends to intensify current efforts to secure government
permits and obtain project financing and to prepare for the launch of construction operations in Nebraska.
On February 6, 2017,
we announced that new environmental improvements in our Elk Creek Project may allow for a permit under the USACE Nationwide Permit
program under Section 404 of the Clean Water Act, instead of the USACE’s lengthier and more costly Individual Permit process.
As a result of recent engineering and environmental design advances achieved by NioCorp and its consulting team, we believe that
the Elk Creek Project’s estimated impacts on federally regulated wetlands and stream channels have been materially reduced.
As a result, the Elk Creek Project is expected to qualify for a Nationwide Permit rather than an Individual Permit under Section
404 of the Clean Water Act. USACE officials have confirmed to NioCorp that impacts at these relatively low levels generally qualify
a project for the Nationwide Permit program, although a final determination by the USACE can be made only after a complete permit
application is submitted.
On January 24, 2017,
we announced that recent metallurgical process breakthroughs allowing the recycling of materials previously planned for disposal
as part of the Elk Creek Project should simplify and streamline the Elk Creek Project’s permitting by the USACE because of
significantly reduced environmental impacts. The Company’s October 2015 PEA called for a seven-kilometer railroad spur line,
along with supporting rail infrastructure, in order to deliver approximately 7,000 tonnes per week of reagents needed for separation
and purification of the three superalloy metals (Niobium, Scandium, and Titanium) that NioCorp plans to produce. Metallurgical
process advances announced by NioCorp (news release of Jan. 18, 2017) will allow the Elk Creek Project to recycle many of these
reagents from material that previously was planned for disposal either in an on-site tailings storage area or as mine backfill.
They also will allow an elimination of the planned railroad spur line and supporting infrastructure. That, in turn, will dramatically
reduce the Elk Creek Project’s projected impacts to wetlands and waterways that are subject to regulation by the USACE.
On January 18, 2017,
we announced the achievement of two major process breakthroughs as part of final design work for the Feasibility Study. Both advances
– one in the Niobium metallurgical process and one related to regenerating useful materials from process streams previously
slated for disposal – may lead to lower-than-expected CAPEX and OPEX for the sub-systems involved. Subsequently, on January
24, 2017, we announced that based on these breakthroughs we will eliminate a planned railroad spur line and supporting infrastructure
from the Elk Creek Project. The original railroad spur line would have required constructing several railroad bridges over the
Nemaha River, Elk Creek, and various tributaries, as well as impacting an estimated 2.6 acres of wetlands and open water, and more
than 1,700 feet of various water channels. Final CAPEX estimates will be determined when all remaining Feasibility Study work is
complete.
On January 9, 2017,
we announced the successful conclusion of negotiations with private landowners in the Elk Creek, Nebraska area that will allow
the Company to purchase land needed for the preferred layout of the Elk Creek Project’s proposed underground mine and surface
processing facility.
On December 14, 2016,
we announced the successful conclusion of the Niobium Optimization Pilot Plant, which has demonstrated high Niobium recoveries
under continuous operating conditions. This was the Company’s final pilot plant planned for the Feasibility Study. The Niobium
Optimization Pilot Plant was constructed and operated at the SGS facility. The primary objective of the Niobium Optimization Pilot
Plant was to test the level of Niobium recoveries that could be achieved in continuous operation, and these Niobium recoveries
averaged 97% over a 36-hour period of the first 48 hours of Niobium Optimization Pilot Plant operations. Additional testing of
the Niobium Precipitation process demonstrated potential operational efficiencies that may provide options for reductions in CAPEX
and/or OPEX for this portion of the flowsheet if and when NioCorp’s processing facility is built and brought into operation.
On December 6, 2016,
we announced the successful completion of the Calcination Pilot Plant, which demonstrated a means of recycling sulphuric acid under
continuous conditions. The Calcination Pilot Plant was constructed and operated at the SGS facility. The Calcination Pilot Plant
operated continuously from November 28 through December 2, 2016. Solid material generated during the Acid Regeneration Pilot
Plant was fed to a kiln where it was heated to decompose the solids into the gaseous precursors of sulphuric acid. The Calcination
Pilot Plant accomplished all three of its objectives, which were to run the calcination unit operation continuously, to generate
quantities of Calcine product for follow-on characterization testing, and to provide a characterization of the gas generated during
calcining.
On November 7, 2016,
we announced the successful conclusion of the Acid Regeneration Pilot Plant as part of the Feasibility Study. This pilot produced
hydrochloric acid under continuous conditions and was constructed and operated at the SGS facility. The Acid Regeneration Pilot
Plant operated continuously from October 17 through October 22, 2016. Sulphuric acid was used to regenerate the hydrochloric
acid used in the Company’s Pre-Leach operation, which is the key first step in the Superalloy materials recovery process.
Data from the pilot demonstrates that 99.94% of the hydrochloric acid used in the Pre-Leach operation can be regenerated.
On September 8, 2016
we announced the successful completion of a JD with the USACE for the Elk Creek Project. The JD issued by the USACE identifies
wetlands and streams within the Elk Creek Project’s footprint that are considered Waters of the US (WOTUS) and are therefore
regulated under the federal Clean Water Act. The Elk Creek Project, as laid out in the October 2015 PEA, was designed to minimize
impacts on WOTUS wetlands and streams. The JD reinforced our belief that there are no WOTUS wetlands and streams in the immediate
footprint of the Elk Creek Project’s product processing facilities.
On July 13, 2016,
we announced that the first sample of scandium material has been produced from our Elk Creek, Nebraska resource. The sample was
produced during the on-going bench testing and optimization program of the Company’s scandium recovery operations at the
SGS facility. The scandium precipitate was produced through a process that is a precursor to the commercial process that will make
higher-purity commercial grade scandium trioxide at our Elk Creek, Nebraska mine and processing facility.
On June 23, 2016,
we announced the successful completion of a Whole Ore Pre-Leach Pilot Plant (WPL) as part of our Elk Creek superalloy materials
feasibility study. We believe the WPL paves the way for our remaining feasibility study pilot plants to commence at the SGS facility.
This pilot plant is a key component of the metallurgical development and design program that we anticipate will lead to the completion
of the Elk Creek superalloy materials feasibility study. It was designed to test the continuous operation of the WPL operation
as well as providing scandium-bearing solutions for a subsequent Scandium Solvent Extraction Pilot Plant, along with Pre-Leach
Residue for a subsequent Acid Bake / Water Leach Pilot Plant.
On June 15, 2016,
we announced that we had entered into the CMC Agreement, under which CMC expects to purchase up to a maximum of 1,875 tonnes per
year, or roughly twenty-five (25%), of our potential annual Ferroniobium production from our Elk Creek, Nebraska resource. Under
the CMC Agreement, CMC will purchase this amount of Ferroniobium under a market-based pricing structure for an initial 10-year
term, with an option to extend beyond that period upon mutual agreement of the parties.
On October 16, 2015,
we announced that we had amended our second Elk Creek PEA following a review by the BCSC. The amended second Elk Creek PEA (the
October 2015 PEA) provided additional descriptions of the scandium demand and pricing assumptions included in the second Elk Creek
PEA, including that a significant portion of the Elk Creek Project revenue, and achieving that revenue projected in the second
Elk Creek PEA, is subject to market growth in scandium, which is a developing market with a risk of oversupply and/or undersupply
disrupting pricing. The October 2015 PEA did not contain any changes to the project economics, mineral resource, plant design or
mine plan when compared to the PEA results announced in August 2015.
On November 10, 2014,
the Company entered into an offtake agreement (the “Offtake Agreement”) with ThyssenKrupp Metallurgical Products GmbH
(“ThyssenKrupp”) whereby ThyssenKrupp will purchase, at market rates, approximately 3,750 metric tons per year, or
fifty percent (50%), of the Company’s current planned annual Ferroniobium production from the Elk Creek Project for an initial
ten-year term, with an option to extend beyond that timeframe. The Offtake Agreement presupposes the Company obtaining project
financing, obtaining all necessary approvals, and constructing a mine and associated production plant at the Elk Creek Project.
ThyssenKrupp is based in Essen, Germany, and is part of the Business Area Materials Services, a global materials distributor and
service provider with 500 branches in 44 countries. The Company appointed ThyssenKrupp as its exclusive sales agent of its production
in Europe, with a stated amount to be sold in Germany. Pursuant to the Offtake Agreement, the Company granted ThyssenKrupp a non-transferable
warrant to acquire 8,569,000 Common Shares of the Company at an exercise price of C$0.67 per Common Share, which expired on December 12,
2015. During the six months ended December 31, 2015, 1,500,500 of these warrants were exercised, with the remainder expiring unexercised.
We continued to advance
Feasibility Study and other Elk Creek Project-related work during the quarter ended March 31, 2017, and completed all planned
pilot testing including the Acid Regeneration, Calcination, and Niobium Optimization Pilot Plants. These final three pilots demonstrated
the ability to regenerate and recycle hydrochloric and sulphuric acids within the plant, as well as confirming the ability to recover
high levels of Niobium under continuous operating conditions. The successful completion of these pilots was a critical step towards
the finalization of the flow sheet for use in the Feasibility Study.
The processing breakthroughs
announced on January 18, 2017 (as discussed above), will allow the Elk Creek Project to recycle many of the reagents from material
that was previously planned for disposal either in an on-site tailings storage area or as mine backfill, and allow the elimination
of the planned railroad spur line and supporting infrastructure. Our October 16, 2015 Preliminary Economic Assessment (the “PEA”)
included a CAPEX estimate of $21.3 million for the rail and supporting rail infrastructure, which included a 24% contingency. NioCorp
understands that those costs will now be removed from the Feasibility Study. We believe that the elimination of the railroad spur
and supporting infrastructure will reduce the projected impacts to wetlands and waterways that are subject to regulation by the
USACE.
Our work efforts and
project breakthroughs announced to date demonstrate Managements’ continued efforts to deliver the completed Feasibility Study
in 2017. Our continued investment in metallurgical studies has helped improve the overall flow sheet for the Elk Creek Project,
and these advances could reduce both OPEX and CAPEX for specific portions of the Elk Creek Project. However, other aspects of the
Elk Creek Project may involve higher costs than were assumed in the October 2015 PEA. Final CAPEX and OPEX estimates for the Elk
Creek Project depend upon a number of other factors and will not be determined until all remaining work is complete on the Feasibility
Study.
With the completion
of the work efforts noted above, we are now engaged in wrapping up the final components of the Feasibility Study and expect to
publicly release our Feasibility Study results by June 30, 2017. Remaining work elements are currently being worked to completion, and include
the following tasks:
|
·
|
Materials Characterization for Tailings Impoundment Design and Mine Backfill Purposes: We are
now analyzing and quantifying the physical, geotechnical, environmental, and geochemical properties of our plant tailings and
evaluating their engineering properties for use as a backfill material in the mine. Testing required in this process involves
the curing of a range of mixtures of the tailings with cement and or backfill that can take up to 28 days. The properties
determined during these test programs will drive the capital and operating costs of the backfill system and the surface
impoundment.
|
|
·
|
Feasibility Study-Level Hydrometallurgical Engineering Design: We have now locked down the hydrometallurgical process and are
working to complete the Feasibility Study level process engineering, layout, and cost estimating for the hydrometallurgical plant
(where we separate and purify Scandium, Titanium and Niobium). We have already completed this work for the pyrometallurgical plant,
mineral processing plant, wastewater treatment plant, and supporting infrastructure systems.
|
|
·
|
Cost Estimating: We are securing multiple vendor cost estimates on major equipment and process systems as design engineering
for those systems is advanced. This involves providing a Feasibility Study-level engineering specification to each vendor in order
to get a Feasibility Study-level estimate for the cost of each major piece of equipment. These quotes are important in estimating
costs of construction, a key input to the Feasibility Study.
|
|
·
|
Updates to Market Studies for Planned Commercial Products: Given that previously commissioned market studies are more than
one year old, we are having these updated. These updates have been completed as of April 13, 2017.
|
|
·
|
Final CAPEX/OPEX Estimates: Once all design engineering, cost estimates, and other inputs are finalized, this data is integrated
into the Feasibility Study Technical Economic Model, which will provide project CAPEX, mining rates, production rates, and OPEX.
The model is prepared with a targeted CAPEX and OPEX accuracy of +/-15%. The model will reflect a detailed construction and commissioning
schedule for all aspects of the Project.
|
|
·
|
Final Review of Feasibility Study Prior to Release: A careful review will be conducted of the Feasibility Study documents to
ensure consistency across its many elements.
|
Once these remaining
steps have been completed, we will announce the Feasibility Study results and findings, followed by the required filing of the
complete Feasibility Study Technical Report within 45 days of such announcement.
In the eighteen months
since the publication of our October 2015 PEA, we have spent approximately $11.7 million in exploration related expenditures. The
following table compares cost guidance from the October 2015 PEA to actual exploration costs incurred as of March 31, 2017.
|
|
|
|
PEA
|
|
|
Actual Expenditures
|
|
Category
|
|
Description
|
|
|
Guidance
1
|
|
|
|
FY2016
|
|
|
|
YTD2017
|
|
|
|
Totals
|
|
PEA Recommended & Budgeted Work
2
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Feasibility Study and Engineering
|
|
Feasibility study with hydrogeological, geochemistry, and geotechnical work programs
|
|
$
|
6,000
|
|
|
$
|
2,617
|
|
|
$
|
3,952
|
|
|
$
|
6,659
|
|
Metallurgical
|
|
Process feasibility study design and metallurgical testing program including backfill testing
|
|
|
2,400
|
|
|
|
844
|
|
|
|
2,057
|
|
|
|
2,901
|
|
Other
2
|
|
Tailings geotechnical field test work with drilling, logging, cone penetration testing, and in situ and borrow materials laboratory testing in Area 7
|
|
|
160
|
|
|
|
-
|
|
|
|
17
|
|
|
|
17
|
|
|
|
Marketing Studies
|
|
|
200
|
|
|
|
-
|
|
|
|
13
|
|
|
|
13
|
|
Sub Total
|
|
|
|
|
8,760
|
|
|
|
3,461
|
|
|
|
6,039
|
|
|
|
9,500
|
|
Other exploration expenditures
3
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Drilling
|
|
|
|
|
-
|
|
|
|
197
|
|
|
|
85
|
|
|
|
197
|
|
Geologists and Field Staff
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
85
|
|
Field Management and Other
|
|
|
|
|
|
|
|
|
944
|
|
|
|
1,004
|
|
|
|
1,948
|
|
Total
|
|
|
|
$
|
8,760
|
|
|
$
|
4,602
|
|
|
$
|
7,128
|
|
|
$
|
11,730
|
|
|
(1)
|
Anticipated expenditures required to develop a feasibility
study, as outlined in the PEA.
|
|
(2)
|
Expenditures included in “Feasibility study and engineering”
in financial statements.
|
|
(3)
|
Expenditures incurred to advance the overall Elk Creek
Project and Feasibility Study.
|
We have embarked upon additional spending relating to the Feasibility Study
to focus on additional engineering work including the design work relating to recycling, the mixed oxides waste stream analysis,
further refining Nb recovery studies and acid regeneration kinetics testing. This increased scope has increased the
expected costs relating to the Feasibility Study for the fourth quarter of fiscal 2017 from $0.2 – $0.3 million to approximately
$1.0 million. This increased estimate for completion of the Feasibility Study raises the Company’s current planned
operational needs for the entire fourth quarter of fiscal 2017 to approximately $2.3 million until June 30, 2017 from the $1.6
million as stated in the quarter ended financial statements from March 31, 2017. In the context of all of the Company’s
spending relating to the Feasibility Study, this reflects an increase to approximately $33 million of which $32 million was spent
as of March 31, 2017, meaning that another $1 million is left to be spent as of such date.
Competitive Business Conditions
There is aggressive
competition within the minerals industry to discover and acquire mineral properties considered to have commercial potential. We
compete for the opportunity to participate in promising exploration projects with other entities. In addition, we compete with
others in efforts to obtain financing to acquire and explore mineral properties, acquire and utilize mineral exploration equipment,
and hire qualified mineral exploration personnel. We may compete with other junior mining companies for mining claims in regions
adjacent to our existing claims, or in other parts of the world should we dedicate resources to doing so in the future. These companies
may be better capitalized than us and we may have difficulty in expanding our holdings through the staking or acquisition of additional
mining claims or other mineral tenures.
In competing for qualified
mineral exploration personnel, we may be required to pay compensation or benefits relatively higher than those paid in the past,
and the availability of qualified personnel may be limited in high-demand mining periods, such as was in past years when the price
of gold and other metals was higher than it is now.
Specialized Skill and Knowledge
The Company’s
ability to continue to progress the Elk Creek Project will rely on its ability to attract and retain individuals with (among others)
financial, administrative, engineering, geological and mining skills, and knowledge of our industry and targeted markets. Much
of the necessary specialized skills and knowledge required by the Company as a mineral exploration company are available from the
Company’s management team and Board of Directors. The Company retains outside consultants if additional specialized skills
and knowledge are required.
Cycles
The mining business
is subject to mineral price cycles. The marketability of minerals and mineral concentrates is also affected by worldwide economic
cycles. At the present time, the weak demand for minerals in many countries is suppressing commodity prices, but it is difficult
to assess how long such trend may continue. Fluctuations in supply and demand in various regions throughout the world are common.
The following table
sets forth commodity prices for the last five years, as reported by the USGS, for the Ferroniobium, Scandium Trioxide and Titanium
Dioxide products the Company anticipates extracting from its Elk Creek Project. USGS pricing surveys may not be representative
of the pricing that the Company anticipates achieving for its products once commercial production begins from its Elk Creek Project.
Year
|
|
Ferroniobium
US Import Price
($/kg-Nb)
1
|
|
|
Scandium
Trioxide
US Price
($/kg)
2
|
|
|
Titanium
Dioxide
US Price
($/kg)
3
|
|
2016
|
|
$
|
34.00
|
|
|
$
|
4,600
|
|
|
$
|
0.73
|
|
2015
|
|
$
|
40.00
|
|
|
$
|
5,100
|
|
|
$
|
0.84
|
|
2014
|
|
$
|
42.50
|
|
|
$
|
5,400
|
|
|
$
|
0.95
|
|
2013
|
|
$
|
45.00
|
|
|
$
|
5,000
|
|
|
$
|
1.25
|
|
2012
|
|
$
|
46.00
|
|
|
$
|
4,700
|
|
|
$
|
2.20
|
|
|
(1)
|
Source: Roskill, “Niobium: Global Industry, Markets and Outlook to 2026, Thirteenth Edition,
2017”. Unit value is mass-weighted average U.S. import value of ferroniobium assuming 65% niobium content.
|
|
(2)
|
Source: USGS Mineral Commodity Summary, 2016. Scandium Trioxide, 99.99% purity, 5-kilogram lot
size.
|
|
(3)
|
Source: USGS Mineral Commodity Summary, 2016. Rutile mineral concentrate, bulk, minimum 95% TiO
2
,
f.o.b. Australia.
|
As NioCorp’s
mining and exploration business is in the exploration stage, and NioCorp has not yet generated any revenue from the operation of
the Elk Creek Project, it is not currently significantly affected by changes in commodity demand and prices, except to the extent
that same impact the availability of capital for mineral exploration and development projects. As it does not carry on production
activities, NioCorp’s ability to fund ongoing exploration is affected by the availability of financing which is, in turn,
affected by the strength of the economy and other general economic factors.
Seasonality
The Elk Creek Project
is not subject to material restrictions on our operations due to seasonality.
Economic Dependence
Other than the Elk
Creek Leases and the Offtake Agreements, NioCorp’s business is not substantially dependent on any contract such as a contract
to sell the major part of its product or services or to purchase the major part of its requirements for goods, services or its
raw materials, or any franchise or license or other agreement to use a patent, formula, trade secret, process or trade name upon
which its business depends.
Government Regulation
The exploration and
development of a mining prospect is subject to regulation by a number of federal and state government authorities. These include
the United States Environmental Protection Agency (“EPA”) and the USACE as well as the various state and local environmental
protection agencies. The regulations address many environmental issues relating to air, soil, and water contamination, and apply
to many mining related activities including exploration, mine construction, mineral extraction, ore milling, water use, waste disposal,
and use of toxic substances. In addition, we are subject to regulations relating to labor standards, occupational health and safety,
mine safety, general land use, export of minerals, and taxation. Many of the regulations require permits or licenses to be obtained,
the absence of which and/or inability to obtain such permits or licenses will adversely affect our ability to conduct our exploration,
development, and operation activities. The failure to comply with the regulations and terms of permits and licenses may result
in fines or other penalties or in revocation of a permit or license or loss of a prospect.
Federal
While none of the
lands on which the Elk Creek Project is proposed to be built are government-owned lands, on lands owned by the United States, mining
rights are governed by the General Mining Law of 1872, as amended, which allows the location of mining claims on certain federal
lands upon the discovery of a valuable mineral deposit and compliance with location requirements. The exploration of mining properties
and development and operation of mines is governed by both federal and state laws. Federal laws that govern mining claim location
and maintenance and mining operations on federal lands are generally administered by the BLM. Additional federal laws, governing
mine safety and health, also apply. State laws also require various permits and approvals before exploration, development or production
operations can begin. Among other things, a reclamation plan must typically be prepared and approved, with bonding in the amount
of projected reclamation costs. The bond is used to ensure that proper reclamation takes place, and the bond will not be released
until that time. Local jurisdictions may also impose permitting requirements (such as conditional use permits or zoning approvals).
Environmental Regulation
Our mineral projects
are subject to various federal, state and local laws and regulations governing protection of the environment. These laws are continually
changing and, in general, are becoming more restrictive. The development, operation, closure, and reclamation of mining projects
in the United States requires numerous notifications, permits, authorizations, and public agency decisions. Compliance with environmental
and related laws and regulations requires us to obtain permits issued by regulatory agencies and to file various reports and keep
records of our operations. Certain of these permits require periodic renewal or review of their conditions and may be subject to
a public review process during which opposition to our proposed operations may be encountered. We are currently operating under
various permits for activities connected to mineral exploration, reclamation, and environmental considerations. Our policy is to
conduct business in a way that safeguards public health and the environment. We believe that our operations are conducted in material
compliance with applicable laws and regulations.
Changes to current
local, state or federal laws and regulations in the jurisdictions where we operate could require additional capital expenditures
and increased operating and/or reclamation costs. Although we are unable to predict what additional legislation, if any, might
be proposed or enacted, additional regulatory requirements could impact the economics of our projects.
U.S. Federal Laws
The Comprehensive
Environmental, Response, Compensation, and Liability Act (“CERCLA”), and comparable state statutes, impose strict,
joint, and several liability on current and former owners and operators of sites and on persons who disposed of or arranged for
the disposal of hazardous substances found at such sites. It is not uncommon for the government to file claims requiring cleanup
actions, demands for reimbursement for government-incurred cleanup costs or natural resource damages. It is also not uncommon for
neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by hazardous
substances released into the environment. The Federal Resource Conservation and Recovery Act (“RCRA”), and comparable
state statutes, govern the disposal of solid waste and hazardous waste and authorize the imposition of substantial fines and penalties
for noncompliance, as well as requirements for corrective actions. CERCLA, RCRA, and comparable state statutes can impose liability
for clean-up of sites and disposal of substances found on exploration, mining and processing sites long after activities on such
sites have been completed.
The Clean Air Act
(“CAA”), as amended, restricts the emission of air pollutants from many sources, including mining and processing activities.
Any future mining operations by the Company may produce air emissions, including fugitive dust and other air pollutants from stationary
equipment, storage facilities, and the use of mobile sources such as trucks and heavy construction equipment, which are subject
to review, monitoring and/or control requirements under the CAA and state air quality laws. New facilities may be required to obtain
permits before work can begin, and existing facilities may be required to incur capital costs in order to remain in compliance.
In addition, permitting rules may impose limitations on our production levels or result in additional capital expenditures in order
to comply with the rules.
The National Environmental
Policy Act (“NEPA”) requires federal agencies to integrate environmental considerations into their decision-making
processes by evaluating the environmental impacts of their proposed actions, including issuance of permits to mining facilities,
and assessing alternatives to those actions. If a proposed action could significantly affect the environment, the agency must prepare
either a detailed statement known as an Environmental Impact Statement (“EIS”) or a less detailed statement known as
an Environmental Assessment (“EA”). The EPA, other federal agencies, and any interested third parties will review and
comment on the scoping of the EIS or EA and the adequacy of any findings set forth in the draft and final EIS or EA. This process
can cause delays in issuance of required permits or result in changes to a project to mitigate its potential environmental impacts,
which can in turn impact the economic feasibility of a proposed project.
The Clean Water Act
(“CWA”), and comparable state statutes, impose restrictions and controls on the discharge of pollutants into waters
of the United States. The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a
permit issued by the EPA or an analogous state agency. The CWA regulates storm water from mining facilities and requires a storm
water discharge permit or Stormwater Pollution Prevention Plan for certain activities. Such a permit requires the regulated facility
to monitor and sample storm water run-off from its operations. The CWA and regulations implemented thereunder also prohibit discharges
of dredged and fill material in wetlands and other waters of the United States unless authorized by an appropriately issued permit.
The CWA and comparable state statutes provide for civil, criminal, and administrative penalties for unauthorized discharges of
pollutants, and impose liability on parties responsible for those discharges for the costs of cleaning up any environmental damage
caused by the release and for natural resource damages resulting from the release.
The Safe Drinking
Water Act (“SDWA”) and the Underground Injection Control (“UIC”) program promulgated thereunder, regulate
the drilling and operation of subsurface injection wells. The EPA directly administers the UIC program in some states and in others
the responsibility for the program has been delegated to the state. The program requires that a permit be obtained before drilling
a disposal or injection well. Violation of these regulations and/or contamination of groundwater by mining related activities may
result in fines, penalties, and remediation costs, among other sanctions and liabilities under the SWDA and state laws. In addition,
third party claims may be filed by landowners and other parties claiming damages for alternative water supplies, property damages,
and bodily injury.
Nebraska
Nebraska has a well-developed
set of environmental regulations and responsible agencies, but does not have clearly defined regulations with respect to permitting
mines. As such, review of the project and the issuance of permits by Nebraska agencies and regulatory bodies could potentially
impact the total time to market for our Elk Creek Project. Other Nebraska regulations govern operating and design standards for
the construction and operation of any source of air contamination and landfill operations. Any changes to these laws and regulations
could have an adverse impact on our financial performance and results of operations by, for example, requiring changes to operating
constraints, technical criteria, fees or surety requirements.
Employees
As of June 1, 2017
we employed eleven (11) employees, each of whom is a full-time employee.
Availability of Raw Materials
All of the raw materials
we require to carry on our business are readily available through normal supply or business contracting channels in Canada and
the United States. Since commencing current operations in August 2010, we have been able to secure the appropriate personnel, equipment,
and supplies required to conduct our contemplated programs. As a result, we do not believe that we will experience any shortages
of required personnel, equipment, or supplies in the foreseeable future.
Reorganization
Except as disclosed
elsewhere herein, the Company has not undergone any material reorganizations in its three most recently completed financial years.
Available Information
We maintain a website
at http://www.niocorp.com. The information contained on, or accessible through, our website is not part of this prospectus. Our
Common Shares are currently registered under Section 12(g) of the Exchange Act, we are currently required to file reports on Forms
10-K, 10-Q or 8-K. Our Annual Report on Form 10-K (which includes our audited financial statements), Quarterly Reports on Form
10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Exchange
Act, are, and will be when filed, available on our website, free of charge, as soon as reasonably practicable after we electronically
file such reports with, or furnish those reports to, the SEC. You may also read and copy these reports, proxy statements and other
information at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of these
documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information
about the operation of the Public Reference Room. SEC filings are also available at the SEC’s website at www.sec.gov. We
do not intend to send security holders a printed version of our Annual Report as it will be available online.
We maintain a Code
of Business Conduct and Ethics for Directors, Officers and Employees (“Code of Conduct”). A copy of our Code of Conduct
may be found on our website in the Corporate Governance section under the main title “Investors”. Our Code of Conduct
contains information regarding whistleblower procedures. We also maintain our Insider Trading Policy on our website.
Properties
Elk Creek Project, Nebraska
Our principal mineral
property is the Elk Creek Property, a niobium exploration project located in southeast Nebraska, approximately 75 kilometers (km)
southeast of Lincoln, Nebraska (the state capital), and 110 km south of Omaha, Nebraska. The Elk Creek Project does not have any
proven or probable reserves under SEC Industry Guide 7 and the project is exploratory in nature. The below information is in part
summarized or extracted from our NI 43-101 technical report entitled “Amended NI 43-101 Technical Report, Updated Preliminary
Economic Assessment, Elk Creek Niobium Project” and dated effective August 4, 2015, with an original report date of September
4, 2015 and an amended report date of October 2015 (the October 2015 PEA), which was prepared for us by SRK Consulting and Roche.
Property Description and Location
The Elk Creek Project
is located in southeast Nebraska, USA. The Property is situated as shown in Figure 1 below and is located within USGS Tecumseh
Quadrangle Nebraska SE (7.5 minute series) mapsheet in Sections 1-6, 9-11; Township 3N; Range 11 and Sections 19-23, 25-36; Township
4N, Range 11, at approximately 40°16’ north and 96°11’ west in the State of Nebraska, in central USA. The property
is approximately 75 km southeast of Lincoln, Nebraska, the state capital of Nebraska.
The Project is a niobium-bearing
carbonatite deposit located in Johnson County, southeast Nebraska. In addition to niobium, other elements of economic significance
include titanium and scandium.
Figure 1 - Property Map showing Location of Elk Creek
Project
Title and Ownership
Previously, the Elk
Creek Project consisted of 65 option agreements covering approximately 3,834 ha.
The Company currently
holds 21 land option agreements that are material to the project. The current optioned land package covers an area of 1,749 ha
Option agreements
are between NioCorp’s wholly-owned subsidiary ECRC and the individual land owners. Land ownership for the agreements material
to the project are shown in Figure 2 and listed in Table 1. Material agreements are those which have been demonstrated to host
mineralized material, or which have the potential to be the site of buildings, facilities or other surface infrastructure.
Figure 2- Land Tenure Map
Source: NioCorp, 2017
Table 1: Active Lease Agreements Covering The Elk Creek Project
|
|
Option Agreement Identifier
|
|
Hectares
|
|
|
Acres
|
|
|
Agreement Expiry
|
1
|
|
Beethe008
|
|
|
107.82
|
|
|
|
266.43
|
|
|
30-Apr-20
|
2
|
|
Beethe002
|
|
|
146.56
|
|
|
|
362.16
|
|
|
19-Feb-21
|
3
|
|
Beethe003
|
|
|
48.69
|
|
|
|
120.32
|
|
|
24-Jun-20
|
4
|
|
Beethe007
|
|
|
66.27
|
|
|
|
163.75
|
|
|
20-Jan-21
|
5
|
|
Heidemann003
|
|
|
48.56
|
|
|
|
120.00
|
|
|
17-Mar-20
|
6
|
|
Heidemann004
|
|
|
62.96
|
|
|
|
155.58
|
|
|
15-Mar-20
|
7
|
|
Heidemann005
|
|
|
79.55
|
|
|
|
196.57
|
|
|
16-Mar-20
|
8
|
|
Heidemann006
|
|
|
64.75
|
|
|
|
160.00
|
|
|
26-Mar-20
|
9
|
|
Heideman007
|
|
|
64.75
|
|
|
|
160.00
|
|
|
25-Mar-20
|
10
|
|
Koehler001
|
|
|
64.75
|
|
|
|
160.00
|
|
|
12-Jun-20
|
11
|
|
Krueger001
|
|
|
123.41
|
|
|
|
304.95
|
|
|
18-Dec-19
|
12
|
|
Nielsen001
|
|
|
112.81
|
|
|
|
278.75
|
|
|
25-Jun-20
|
13
|
|
Othmer003
|
|
|
61.48
|
|
|
|
151.93
|
|
|
22-Jan-21
|
14
|
|
Othmer004
|
|
|
113.31
|
|
|
|
280.00
|
|
|
22-Jan-21
|
15
|
|
Watermann001
|
|
|
145.69
|
|
|
|
360.00
|
|
|
6-Sep-21
|
16
|
|
Woltemath80S
|
|
|
32.37
|
|
|
|
80.00
|
|
|
4-Dec-19
|
17
|
|
Woltemath001
|
|
|
48.47
|
|
|
|
119.77
|
|
|
21-Jan-20
|
18
|
|
Woltemath002
|
|
|
152.49
|
|
|
|
376.81
|
|
|
4-Dec-19
|
19
|
|
Woltemath003J
|
|
|
89.03
|
|
|
|
220.00
|
|
|
25-Mar-20
|
20
|
|
Woltemath003P
|
|
|
82.96
|
|
|
|
205.00
|
|
|
25-Mar-20
|
21
|
|
Shuey001
|
|
|
32.37
|
|
|
|
80.00
|
|
|
28-May-20
|
Source: NioCorp, 2017
The known mineralized
material is wholly contained within parcels Woltemath003J and Beethe008, and agreements covering both of these properties have
been secured. The Company considers these two leases to be the only leases on which the Company’s development of the Elk
Creek Project is substantially dependent. The Company is still in the process of negotiating certain leases at the Elk Creek Project
that are ancillary to the project’s development. While the Company believes these leases would be useful in the economic
development of the project, the Company does not believe that the Company’s development of the project is substantially dependent
on the extension of these leases and these leases are not material to the Elk Creek Project. The Company believes that the surface
plant and facilities associated with the Elk Creek Project could be located in any number of places, and would not necessarily
need to be sited on lands contiguous with the Beethe008 and Woltemath003 properties.
As part of the exploration
option agreements, where required, the Company has also secured surface rights, which allow for access to the land for drilling
activities and associated mineral exploration and project development work.
Each of the agreements
except for Woltemath80S include a 2% Net Smelter Return (“NSR”) royalty attached with an OTP. The agreements grant
the operator an exclusive right to explore and evaluate the property for a period of 60 months, with an OTP the mineral interest
and in some cases the surface rights at any time during the term. As the Woltemath80S agreement is limited to an OTP for the surface
rights only, it does not contain an NSR provision.
Accessibility, Physiography, Climate and Infrastructure
The Elk Creek Property
is easily accessible year round as it is situated approximately 75 km southeast of Lincoln (State Capital), Nebraska and approximately
110 km south of Omaha, Nebraska. Access to the site can be completed via road or from one of the regional airports. There are several
regular flights to both Lincoln and Omaha; however, the Elk Creek Project is most easily accessible from Lincoln. From Lincoln
Municipal Airport, the Elk Creek Property is accessed via paved roads on the main network and a secondary network of gravel roads.
Geologists can be
sourced from local universities. An experienced mining related workforce can be found in Denver Colorado (eight hours drive west
of the Elk Creek Project).
Southeast Nebraska
is situated in a Humid Continental Climate (Dfa) on the Köppen climate classification system. In eastern Nebraska this climate
is generally characterized by hot humid summers and cold winters. Average winter temperatures vary between -10.4°C to 1.6°C.
Average summer temperatures vary between 18°C to 32°C. Exploration may be conducted all year round.
Average monthly precipitation
(rain and snowfall) varies between 22 and 127 mm. Average yearly precipitation is between 800 and 850 mm with an average yearly
snowfall of approximately 72 cm. Nebraska is located within an area known for tornadoes which runs through the central U.S. where
thunderstorms are common in the spring and summer months. Tornadoes primarily occur during the spring and summer and may occur
into the autumn months.
The Company has negotiated
surface rights as needed as part of the lease agreements. It is expected that with appropriate studies and negotiations with land
owners that land access and provision of land for infrastructure development will be achievable. There is sufficient suitable land
area available within the project area for mine waste disposal, for future tailings disposal, a processing plant, and related mine
infrastructure.
Elk Creek is the nearest
town to the Elk Creek Project, with a population of approximately 100 people. Tecumseh, with roughly 1,700 inhabitants, is the
nearest town of any size to the Elk Creek Project site and is situated approximately 11 km north of the Elk Creek Property. Tecumseh
is well-suited as a staging base for future exploration work at The Elk Creek Project with available accommodations, fuel, and
supplies. Contractors, bulk supplies, and skilled labor (engineering, surveying) may be sourced locally or from the cities of Lincoln
or Omaha. Mining activities currently taking place in the area are limited to limestone and aggregate operations to support the
local cement manufacturing and construction industries.
The Company has links
to the University of Nebraska – Lincoln which operates a geology department. Between 2014 and 2016, the Company periodically
employed University of Nebraska – Lincoln geology students to complete field geology tasks. The University also owns the
core drilled by Molycorp in the 1970s and 1980s at the project site, and stores that core at its dedicated core storage facility
in Mead, Nebraska. The Company has periodically accessed this historic core between 2011 and 2016 for the purposes of re-logging,
re-assaying and reinterpreting the geology of the resource. The Company does not have a formal agreement with the University related
to the development of the Elk Creek Project.
There are three electrical
power generating stations within a 50 km radius of the Elk Creek Project that include the Beatrice and Sheldon coal generating
stations, and the Cooper nuclear power generating station.
The nearest railway
heads are found in both Tecumseh and Elk Creek. The Burlington Northern Santa Fe (BNSF) railway runs parallel to the Nemaha River
connecting Kansas City to Omaha and Lincoln.
The nearest major
airports are located in Lincoln and Omaha, Nebraska, and Kansas City, Kansas.
Water sources are
available near the Property from local rivers and from groundwater wells for drilling requirements. The local topography of eastern
Nebraska is relatively low-relief with shallow rolling hills intersected by shallow river valleys. Elevation varies from about
325 to 390 meters above sea level (masl). Bedrock outcrop exposure is nonexistent in the Elk Creek Project area.
The majority of the
Elk Creek Project area is used for cultivation of corn and soybeans, along with uses as grazing land. Native vegetation typical
of eastern Nebraska is upland tall-grass, prairie and upland deciduous forests.
Geology and Mineralization
Geology
The Nebraska Precambrian
basement predominantly comprises granite, diorite, basalt, anorthosite, gneiss, schist and clastic sediments. A series of island
arcs sutured onto the Archean continent created the basic framework of the area. This suture left a north-trending intervening
boundary zone ancestral to the Nemaha Uplift, providing a pre-existing tectonic framework which controlled the trend of the later
Midcontinent Rift System (1.0 to 1.2 Ga) (Carlson & Treves, 2005). The Carbonatite is located at the northeast extremity of
the Nemaha Uplift
The Elk Creek Property
includes the Carbonatite that has intruded older Precambrian granitic and low- to medium-grade metamorphic basement rocks. The
Carbonatite and Precambrian rocks are believed to be unconformably overlain by approximately 200 m of Paleozoic marine sedimentary
rocks of Pennsylvanian age (ca. 299 to 318 Ma).
As a result of this
thick cover, there is no surface outcrop within the Elk Creek Project area of the Carbonatite, which was identified and targeted
through magnetic surveys and confirmed through subsequent drilling. The available magnetic data indicates dominant northeast, west-northwest
striking lineaments and secondary northwest and north oriented features that mimic the position of regional faults parallel and/or
perpendicular to the Nemaha Uplift.
The Elk Creek Carbonatite
is an elliptical magmatic body with northwest trending long axis perpendicular to the strike of the 1.1 Ga Midcontinent Rift System,
near the northern part of the Nemaha uplift (Burchett, 1982; Carlson, 1997). It was first discovered by drilling in 1971 and tentatively
identified as a carbonatite on the basis that it resembled rocks of the Fen District of Norway (Treves et al., 1972a and 1972b).
The definitive confirmation of carbonatite was completed using Rare Earth Element (REE), P205 and 87Sr/86Sr isotope analysis (Brookins
et al., 1975). The Carbonatite has also been compared to the Iron Hill carbonatite stock in Gunnison County, Colorado on the basis
of similar mineralogy (Xu, 1996).
The Carbonatite consists
predominantly of dolomite, calcite and ankerite, with lesser chlorite, barite, phlogopite, pyrochlore, serpentine, fluorite, sulfides
and quartz (Xu, 1996). It is, however, believed from stratigraphic reconstruction based on drill core observation in the area that
the carbonatite is unconformably overlain by approximately 200 m of essentially flat-lying Palaeozoic marine sedimentary rocks,
including carbonates, sandstones and shales of Pennsylvanian age (ca. 299 to 318 Ma).
Current studies suggest
that the Carbonatite was emplaced ca. 500 Ma (Xu, 1996) in response to stress along the Nemaha Uplift boundary predating deposition
of the Pennsylvanian sedimentary sequence (ca. 299 to 318 Ma). However, observations on drill cores from The Elk Creek Project
site show that the contact between the Carbonatite body and the Pennsylvanian sediments is a sheared but oxidized contact suggesting
that the Carbonatite is intrusive in the Pennsylvanian sequence. Furthermore, both rock types appear to have been affected by at
least one main brittle-ductile deformation event resulting in formation of fault structures. Microstructures including sub-vertical
and sub-horizontal tension veins, together with related sheared veins and fault planes displaying sub-vertical and sub-horizontal
slickensides along drill cores are indications for the presence of extensional and oblique to strike-slip faults. These faults
could correspond to the magnetic lineaments present in the area.
Mineralization
The property hosts
niobium, titanium, and scandium mineralization as well as rare earth elements and barium mineralization that occurs within the
Elk Creek Carbonatite. The current known extents of the Carbonatite unit are approximately 950 m along strike, 300 m wide, and
750 m in dip extent, below the unconformity. Niobium, titanium and scandium are considered the main elements of interest, within
additional background on rare earth elements mineralization.
The deposit contains
significant concentrations of niobium. Based on the metallurgical testwork completed to date at a number of laboratories using
QEMSCAN® analysis, the niobium mineralization is known to be fine grained, and that 77% of the niobium occurs in the mineral
pyrochlore, while the balance occurs in an iron-titanium-niobium oxide mineral of varying composition.
Within the Elk Creek
Carbonatite, a host of other elements exist with varying degrees of concentration. The Company has completed both whole rock analysis
and multi-element analysis on all samples for the 2014 program, plus resampling of selected historical core/pulps between 2011
and 2014.
Historical Exploration
Drilling at the Elk
Creek Project was conducted in three phases. The first was during the 1970’s and 1980’s by the Molybdenum Company of
America (Molycorp), the second in 2011 by Quantum (NioCorp under its former name), and the third and latest program in 2014 by
NioCorp. To date, 129 diamond core holes have been completed for a total of 64,981 m over the entire geological complex. Of these
a total of 48 holes (33,909 m) have been completed to date in the mineralized area and used in the current Mineral Resource Estimate.
Five holes for a total
length 3,353.1 m, of additional drilling have been drilled since the completion of the April 28, 2015 Mineral Resource Estimate.
These holes were drilled for hydrogeologic and geotechnical purposes, and were not intended to augment the Mineral Resource Estimate.
All drilling has been
completed using a combination of Tricone, Reverse Circulation (RC) or Diamond Drilling (DDH) in the upper portion of the hole within
the Pennsylvanian sediments. All drilling within the underlying Carbonatite has been completed using DDH methods.
Table 2: Summary of Drilling Database within Elk Creek Deposit
Area
Year
|
|
Company
|
|
Number of
Holes
|
|
|
Average
Depth(m)
|
|
|
Sum Length(m)
|
|
1970-1980
|
|
Molycorp
|
|
|
27
|
|
|
|
596.6
|
|
|
|
16,108.2
|
|
2011
|
|
Quantum
|
|
|
3
|
|
|
|
772.6
|
|
|
|
2,317.7
|
|
2014
|
|
NioCorp
|
|
|
18
|
|
|
|
845.4
|
|
|
|
15,482.8
|
|
Subtotal
|
|
|
|
|
48
|
|
|
|
700.9
|
|
|
|
33,908.7
|
|
Source: SRK, 2015
Molycorp 1973-1986
Between 1973 and 1974,
Molycorp completed six drillholes: EC-1 to EC-4, targeting the Elk Creek anomaly and two other holes outside the Elk Creek anomaly
area (Anzman, 1976). Drillholes were typically carried out by RC drilling through the overlying sedimentary rocks and diamond drilling
through the Ordovician-Cambrian basement rocks.
Molycorp continued
their drill program from 1977 and, in May 1978, Molycorp made its discovery of the current Project with drillhole EC-11. EC-11
is located on Section 33, Township 4N, and Range 11. The Carbonatite hosting The Elk Creek Project was intersected at a vertical
depth of 203.61 m (668 ft).
Molycorp continued
its drilling program through to 1984, which mainly centered on The Elk Creek Project within a radius of roughly 2 km. By 1984,
Molycorp had completed 57 drillholes within the Elk Creek gravity anomaly area, which included 25 drillholes over The Elk Creek
Project area.
From 1984 to 1986,
drilling was focused on the Elk Creek gravity anomaly area. The anomaly area is roughly 7 km in diameter and drilling was conducted
on a grid pattern of approximately 610 by 610 m (roughly 2,000 by 2,000 ft.) with some closer spaced drillholes in selected areas.
By 1986, a total of
106 drillholes were completed for a total of approximately 46,797 m (153,532 ft). The deepest hole reached a depth of 1,038 m (3,406
ft) and bottomed in carbonatite.
Quantum, 2010-2011 (NioCorp under its former name)
In April 2011, Quantum
conducted a preliminary drill program (three holes) on the Elk Creek deposit and two REE exploration targets (two holes), which
have been excluded from the current Mineral Resource Estimation, as they do not intersect the Nb
2
O
5
anomaly
and are located to the east. The objectives of the drill program over the Elk Creek Project were to verify the presence of higher
grade niobium mineralization at depth, and to infill drill the known niobium deposit in order to upgrade the resource category
of the previous resource estimate and expand the known resource. The drill program was also established to collect sufficient sample
material for metallurgical characterization and process development studies of the niobium mineralization.
The 2011 program consisted
of five inclined drillholes, totaling 3,420 m of NQ size diameter core. Inclusive of this total, three drillholes, totaling 2,318
m were drilled into the known Elk Creek deposit.
NioCorp 2014 to present
NioCorp commenced
drilling on the Elk Creek Project using a three-phased program with the aim of increasing the confidence in the 2012 Mineral Resource
Estimate from Inferred to Indicated. The three-phased program was originally based on 14 drillholes for approximately 12,150 m
(announced in a press release on April 29 2014), but was subsequently expanded during the program to 18 drillholes for approximately
15,482 m. Three of the 18 drillholes were drilled for the purpose of metallurgical characterization and process development studies.
Two of these drillholes, NEC14-MET-01 and NEC14-MET-02 were not assayed, while NEC14-MET-03 was quarter cored with one quarter
being assayed and the remainder used for metallurgical testwork. The drilling has been orientated to intersect the geological model
from the southwest and northeast (perpendicular to the strike), with the exception of NEC14-011 and NEC14-012, which were oriented
southeast and northwest, respectively.
Procedures
Detailed descriptions
of Molycorp’s drilling, sample procedures, analyses and security have not been documented and reviewed. Given Molycorp’s
position as a leader in the rare earth industry at the time, it is likely Molycorp applied industry best practice for the time
period. The 2011 drilling campaign was managed by Dahrouge and SRK under the same quality and procedures used in the current study.
The 2014 drilling program includes a quality control program to ensure the results can be used to verify earlier drilling results
and add confidence to the overall understanding of the deposit.
For the 2014 drilling
program planned drillhole collars were initially located using a handheld GarminTM Global Positioning System (GPS) and marked with
wooden stakes. A tracked excavator was used to construct the drill pad and collars were then relocated using the GPS with wooden
stakes after pad construction. A geological compass and an azimuth pointing system (APS) was used to sight in the drill to the
planned azimuth and inclination.
The 2014 core drilling
was conducted by both West-Core Drilling and Idea Drilling, both private contractors. West-Core used both an AVD R40 track-mounted
core drill and an Atlas Copco CS-14 track-mounted core drill, while Idea used an Atlas Copco CT-20 truck-mounted core drill. Overburden
was cased in all drillholes to depths ranging from 18 to 37 m. The Pennsylvanian limestones and mudstones overlying the target
carbonatite were drilled PQ-sized core and HQ-sized core for drillholes NEC14-020 to NEC14-023. The Carbonatite was drilled with
HQ-sized core, with the exception of the three metallurgical holes (NEC14-MET-01, NEC14-MET-02 and NEC-14MET-03), which were drilled
completely using PQ-sized core. Core size reduction took place just beneath the Pennsylvanian-carbonatite contact at depths ranging
from 206 to 238 m. The core drilling rigs operated 24 hours/day and 7 days/week, with typical progress of 40 m/day.
During the drilling
operation, the core is retrieved from the core barrel and laid sequentially into wooden core boxes by the drilling contractor.
Interval blocks are then placed at all run breaks. Core recovery and RQD were generally good for most drill core. Core recovery
has been recorded in the data base and is measured in the field at the drilling rig by the geologist. Once the box is full, the
ends and top of the box are labeled with drillhole identification and the sequential box number. Upon completing a box, it is stacked
on a pallet or on a truck bed at the drill rig. At the end of each drilling shift, the boxes of core are transported by the drilling
contractor in a pickup truck to the NioCorp field office. At this point, the core is in the custody of Dahrouge Geological Consulting
Ltd. (Dahrouge). Eight of the 2014 drillholes had piezometers installed in them after drilling was complete. For these drillholes,
surface completion consisted of surface casing capped with a locking steel cover, a 1.2 m
2
cement pad around the surface
casing and a steel name plate attached to the casing. Surface completion for the drillholes that did not have piezometers installed
consisted of a steel marker post and attached name plate. All name plates include drillhole number, total depth and orientation.
Abandonment of the drillholes consisted of cementing from total depth to surface in the non-piezometer drillholes and from total
depth to the bottom of the piezometers in the other drillholes with piezometer installations.
All drilling completed
by NioCorp has been logged by qualified geologists for both geological and geotechnical purposes. Trained staff was involved at
all stages of the sampling, sample packaging and sample transportation process. Day to day logging tasks were split between Dahrouge
and SRK, whereby Dahrouge completed all geological and sampling related tasks, while SRK focused on geotechnical logging requirements.
During the diamond drilling program (including the RC pre-collar drilling of RC/DD holes), staff members were based full time at
the drill project site.
Core sampling method
and approach has been consistent through the 2011 and 2014 drill programs. Core was boxed on site and delivered each day to a core
facility on the Elk Creek project site where the core was logged and split. Drill core was boxed and transported from each drill
rig to the core processing facility (distances up to 800 m), at the end of each 12-hour shift. Core logging involved detailed geotechnical
and geological information. All key geological features have been logged comprehensively. A project database (SQL) which contains
only the relevant rock codes and lithology descriptions has been created. Validation routines have been created to ensure data
entry fits required rules. The drill core within each core box was marked up and then split along orientation marks. Cutting was
completed using one of three electric-powered, water-cooled diamond-bladed BD 3003E core saws at the Elk Creek sample preparation
and storage facility. HQ and minor intervals of PQ core were halved for assay. The remaining core is stored at the Elk Creek Project
site for the drilling post 2011, while the historical samples are stored at a separate facility in Mead, Nebraska. Sample intervals,
were taken generally using 1 m in length, were marked on the core and recorded in the geological database. Each sample is assigned
a unique sample number. Hand-held Niton-XRF and Magnetic susceptibility measurements were collected on the core to assist geological
and sample divisions. Specific gravity measurements were performed at approximately 6 m spacing. The marked sample intervals were
split in half by a wet diamond saw. Sampled intervals were placed in durable barcoded sample bags that were clearly labelled and
contain back up sample tags within each bag. Sample bags containing original core sections and field inserted control samples were
barcode scanned and secured in 5-gallon plastic shipping pails and dispatched to the commercial laboratory, with detailed shipping
logs and preparation requests. Transportation was completed by bonded trucking company to ensure a chain of custody was maintained.
The 2011 and 2014
sawn core samples were shipped to Activation Laboratories Ltd. (Actlabs), 1336 Sandhill drive, Ancaster, Ontario, Canada. Actlabs
is the primary laboratory for sample preparation and for analysis. Core samples were systematically assayed at Actlabs for niobium
(Nb
2
O
5
) and tantalum (Ta2O5) by XRF analysis. Whole Rock analysis and 43 Major Elements were completed using
ICP and ICP/MS (by a Perkin Elmer Sciex ELAN 6000, 6100, 9000 ICP/MS) finish following a Lithium metaborate/tetraborate fusion
preparation as defined by analytical Actlabs’ “8-REE Major Elements Fusion ICP(WRA)/Trace Elements Fusion ICP/MS(WRA4B2)”
package.
NioCorp has integrated
a series of routine QA/QC procedures throughout the sampling and analytical analysis for both the 2011 and 2014 drilling programs,
to ensure a high level of quality is maintained throughout the process. For the 2011 and 2014 sampling the QA/QC consisted of the
insertion of duplicate samples taken from various stages of the process, insertion of known control samples (Standards Reference
Material (SRM) and Blanks), plus an external check at a SGS laboratory. The duplicates accounted for 12% of the submissions split
between field duplicates, coarse rejects and pulp duplicates. A further 5% of submissions were SRM’s and approximately 5%
we field blanks testing for any cross contamination. In addition, 5% of the routine samples were selected for external pulp check
samples, and submitted to SGS, as a third party analytical result confirmation.
Summary Results
The locations of the
drill holes completed since 2014 appear in Figure 3 below. Notable results from NioCorp’s exploration program are summarized
below. Note that these results are specific to the niobium content of the mineralized material at the Elk Creek project as niobium
is a useful indicator element. Each hole was also assayed for Ti, Sc and numerous other elements, and the full assay results are
captured in the resource database for the project.
Drillholes NEC14-006,
NEC14-007 and NEC14-008 were drilled along a North-East to South-West section line that was designed to drill across the mineralized
material. These holes were drilled at approximately 50 m (165 ft.) intervals along the drill section line.
Analytical highlights
for NEC14-007 and NEC14-008 appear below. Note that due to the angle of the drilling and other factors, the results presented for
the drill holes do not represent the true thickness of the mineralized material:
|
-
|
279 m interval between 628 – 907 m (open) at 0.60 % Nb
2
O
5
, including
|
|
§
|
16 m (646 – 663 m) at 0.97 % Nb
2
O
5
|
|
§
|
23 m (720 – 744 m) at 0.93 % Nb
2
O
5
|
|
§
|
95 m (813 – 908 m) at 0.80 % Nb
2
O
5
, open at depth
|
|
-
|
448 m interval between 438 – 886 m at 0.69 % Nb
2
O
5
, including
|
|
§
|
32 m (466 – 498 m) at 1.09 % Nb
2
O
5
|
|
o
|
5 m (493 – 498 m) at 1.68 % Nb
2
O
5
|
|
§
|
9 m (553 – 563 m) at 1.00 % Nb
2
O
5
|
|
§
|
13 m (610 – 623 m) at 1.02 % Nb
2
O
5
|
|
§
|
12 m (760 – 772 m) at 2.12 % Nb
2
O
5
|
|
o
|
3 m (768-771 m) at 3.23% Nb
2
O
5
|
|
§
|
16 m (772 – 788 m) at 1.01 % Nb
2
O
5
|
|
§
|
10 m (835 – 845 m) at 1.15 % Nb
2
O
5
|
Drillholes NEC14-009
and NEC14-010 were completed along a parallel section line to the east of holes NEC14-006, NEC14-007 and NEC14-008.
|
-
|
183 m interval between 218 – 402 m (open) at 0.55 % Nb
2
O
5
, including
|
|
§
|
29 m (218 – 247 m) at 0.76 % Nb
2
O
5
|
|
§
|
11 m (271 – 282 m) at 1.06 % Nb
2
O
5
|
|
§
|
11 m (302 – 313 m) at 1.01 % Nb
2
O
5
|
|
-
|
252 m interval between 629 – 881 m at 0.73 % Nb
2
O
5
|
|
§
|
70 m (788 – 859 m) at 1.10 % Nb
2
O
5
|
|
-
|
311 m interval between 311 – 722 m at 0.64 % Nb
2
O
5
|
|
§
|
26 m (442 – 468 m) at 0.72 % Nb
2
O
5
|
|
§
|
14 m (537 – 551 m) at 0.86 % Nb
2
O
5
|
|
o
|
7 m (537 – 544 m) at 1.25 % Nb
2
O
5
|
|
§
|
10 m (538 – 548 m) at 1.0 % Nb
2
O
5
|
|
§
|
30 m (611- 641 m) at 0.96 % Nb
2
O
5
|
|
§
|
24 m (678– 700 m) at 1.42 % Nb
2
O
5
|
|
§
|
6 m (716.5 – 722.5 m) at 2.47 % Nb
2
O
5
|
|
o
|
3.5 m
(
716.5 – 720 m
)
at 3.09 %
Nb
2
O
5
(
including individual assay samples
in excess of 4.06%
)
|
Drillholes NEC14-011
and NEC14-012 define a north-west to south-east drill section through mineralized material, and the holes are oriented at right
angles to the two section lines defined by NEC14-006 through NEC14-0010. The results support niobium mineralization around the
outer edges of the mineralized material.
|
-
|
101 m interval between 223 – 324 m (open) at 1.00% Nb
2
O
5
|
|
-
|
208.8 m interval between 251 – 459.80 m (open) at 0.95% Nb
2
O
5
, including
|
|
§
|
84 m (251 – 335 m) at 1.00 % Nb
2
O
5
|
|
§
|
56 m (352 – 408 m) at 0.95 % Nb
2
O
5
|
|
§
|
46 m (414 – 460 m) at 1.15 % Nb
2
O
5
|
|
§
|
79 m (476 – 555 m) at 0.52 % Nb
2
O
5
|
NEC14-013 is a vertical
hole drilled through the center of the mineralized material, which provided data for both mineralized material and geotechnical
purposes. NEC14-015 was drilled on a southwest to northeast section line. Along with holes NEC14-012 and NEC14-011, the results
are supporting niobium mineralization around the outer edges of the mineralized material and its continuation at depth.
|
-
|
685.04 m interval between 195.22 – 880.26 m (open at depth) at 0.74% Nb
2
O
5
, including
|
|
§
|
53 m (222.00 – 533.00 m) at 0.55 % Nb
2
O
5
|
|
§
|
48 m (533.00 – 581.00 m) at 1.08 % Nb
2
O
5
|
|
§
|
41 m (582.00 – 623.00 m) at 0.72 % Nb
2
O
5
|
|
§
|
22 m (623.00 – 645.00 m) at 1.01 % Nb
2
O
5
|
|
§
|
46 m (704.00 – 750.00 m) at 1.00 % Nb
2
O
5
|
|
§
|
109 m (763.00 – 872.00 m) at 1.16 % Nb
2
O
5
|
|
o
|
8 m (819.00 – 827.00 m) at 2.12 % Nb
2
O
5
|
|
-
|
291.64 m interval between 536.20 – 827.84 m (open at depth) at 0.72% Nb
2
O
5
, including
|
|
§
|
77.80 m (536.20 – 614 m) at 1.06 % Nb
2
O
5
|
|
§
|
62.00 m (653.00 – 715.00) at 1.02 % Nb
2
O
5
|
|
o
|
4.56 m (674.44 – 679.00 m) at 2.10 % Nb
2
O
5
|
|
o
|
5.09 m (687.24 – 692.33 m) at 2.23 % Nb
2
O
5
|
|
§
|
22.23 m (715 – 737.23 m) at 0.50 % Nb
2
O
5
|
|
§
|
16.84 m (811 – 827.84 m) at 0.52 % Nb
2
O
5
|
NEC14-014 was drilled
along a southwest to northeast section line through the mineralized material. The results support niobium mineralization in the
area of the defined mineralized material and its continuation at depth.
|
-
|
390 m interval between 511 - 901 m (open at depth) at 0.68% Nb
2
O
5
, including
|
|
§
|
5 m (511 – 526 m) at 1.27 % Nb
2
O
5
|
|
o
|
5 m (520 – 525 m) at 2.03 % Nb
2
O
5
|
|
§
|
126 m (649 -775 m) at 1.06 % Nb
2
O
5
|
|
o
|
15 m (721 – 736 m) at 1.59 % Nb
2
O
5
|
|
o
|
8 m (654 – 762 m) at 1.66 % Nb
2
O
5
|
NEC14-016 was drilled
along a northeast to southwest trending section line through the mineralized material, and NEC14-Met-03 was a vertical hole drilled
through the approximate center of the mineralized material. NEC14-Met-03 was drilled along with two other holes (NEC14-Met-01 and
NEC14-Met-02) for the specific purpose of generating a bulk sample of the mineralized material for pilot-scale testing, and was
quartered and assayed due to its location. These results, in addition to drillholes NEC14-011, NEC14-012, NEC14-013, NEC14-014,
and NEC14-015 support niobium mineralization in the area of the mineralized material and its continuation at depth.
|
-
|
37 m interval between 253 - 290 m at 0.61% Nb
2
O
5
|
|
-
|
10 m interval between 581 - 591 m at 0.68% Nb
2
O
5
|
|
-
|
276 m interval between 638 – 914 m (open at depth) at 0.95% Nb
2
O
5
, including
|
|
§
|
22 m (650 – 672 m) at 1.18 % Nb
2
O
5
|
|
§
|
68 m (715 -783 m) at 1.49 % Nb
2
O
5
|
|
o
|
10 m (766 – 776 m) at 2.02 % Nb
2
O
5
|
|
§
|
28 m (806 -834 m) at 1.12 % Nb
2
O
5
|
|
§
|
47 m (867 -914 m) at 1.01 % Nb
2
O
5
|
|
-
|
716 m interval between 197 - 913 m (open at depth) at 0.85% Nb
2
O
5
, including
|
|
§
|
8 m (289 – 297 m) at 1.24 % Nb
2
O
5
|
|
§
|
12 m (328 -340 m) at 1.14 % Nb
2
O
5
|
|
§
|
135 m (396 – 531 m) at 1.02 % Nb
2
O
5
|
|
§
|
171 m (645 – 816 m) at 1.12 % Nb
2
O
5
|
|
§
|
83 m (830 – 913 m) at 1.00 % Nb205
|
Drillholes NEC14-020,
NEC14-021, NEC14-022 and NEC14-023 were drilled through the mineralized material, along southwest to northeast trending section
lines. These results support niobium mineralization in the area of the mineralized material and its continuation at depth.
|
-
|
351 m (237 – 588 m) at 0.71 % Nb
2
O
5
, including
|
|
§
|
42 m (285- 327 m) at 1.41 % Nb
2
O
5
|
|
o
|
8 m (295 – 303 m) at 2.10 % Nb
2
O
5
|
|
§
|
20 m (377 – 397 m) at 1.01 % Nb
2
O
5
|
|
§
|
26 m (419 – 445 m) at 0.87 % Nb
2
O
5
|
|
-
|
13 m (507 – 520 m) at 0.92 % Nb
2
O
5
|
|
§
|
17 m (570 - 587 m) at 1.08 % Nb
2
O
5
|
|
-
|
304 (446 -750 m) at 0.98 % Nb
2
O
5
, including
|
|
§
|
15 m (446 – 461 m) at 1.08 % Nb
2
O
5
|
|
§
|
86 m (510 – 596 m) at 1.11 % Nb
2
O
5
|
|
§
|
88 m (654 - 742 m) at 1.28 % Nb
2
O
5
|
|
o
|
4 m (660 – 664 m) at 3.41 % Nb
2
O
5
|
|
-
|
322 m (437 – 759 m) at 0.60 % Nb
2
O
5
, including
|
|
§
|
56 m (438 – 494 m) at 0.81 % Nb
2
O
5
|
|
§
|
22 m (467 - 489 m) at 1.23 % Nb
2
O
5
|
|
§
|
29 m (527 – 556 m) at 1.17 % Nb
2
O
5
|
|
§
|
10 m (686 – 696 m) at 1.15 % Nb
2
O
5
|
|
-
|
25 m (808 – 833 m) at 0.45 % Nb
2
O
5
|
|
-
|
17 m (865 – 882 m) at 0.45 % Nb
2
O
5
|
|
-
|
9 m (304 – 313 m) at 0.46 % Nb
2
O
5
|
|
-
|
135 m (333 – 468 m) at 0.70 % Nb
2
O
5
, including
|
|
§
|
7 m (333 – 340 m) at 1.29 % Nb
2
O
5
|
|
§
|
4 m (348 - 352 m) at 1.30 % Nb
2
O
5
|
|
§
|
51 m (366 - 417 m) at 1.04 % Nb
2
O
5
|
|
o
|
16 m (381 – 397 m) at 1.33 % Nb
2
O
5
|
|
-
|
24 m (527 – 550 m) at 0.39 % Nb
2
O
5
|
|
-
|
18 m (568 – 586 m) at 0.86 % Nb
2
O
5
|
Figure 3 - Elk Creek Project – Recent Drill Hole Locations
Source: NioCorp, 2016
Mineral Resources
Mineral Resources
have been estimated in conformity with generally accepted CIM Estimation of Mineral Resource and Mineral Reserves Best Practices
guidelines, and are reported in accordance with the CIM Definition Standards – For Mineral Resources and Mineral Reserves,
May 10, 2014.
The drillhole database
used in the estimation is of high quality and has been independently verified by SRK. A three-dimensional geologic model was constructed
using ARANZ Leapfrog® Mining Software (Leapfrog®). Modeling was based on logged geology in the drilling database, using
a combination of geological controls and niobium grade shells.
The grade estimation
was confined to a hard boundary of three grade shell domains defined at 0.3%, 0.4% and 0.5% niobium pentoxide (Nb
2
O
5
%),
with the estimation using only the composited samples from the same domain.
Developments in the
metallurgical testwork indicated the potential to recover TiO
2
and Sc based on a revised flowsheet. Further, the Company
completed a re-assay program of historical pulps, which were not included in the original 2011/2012 re-assay programs. The updated
database has been provided to SRK who completed a review of the database and the QA/QC information for the additional elements
to ensure their inclusion in the estimation process.
External laboratory
checks showed a bias between SGS and Actlabs laboratories, with Actlabs returning higher values for Nb
2
O
5
.
The slight high bias confirms the slight over reporting noted in the routine submissions of standard reference materials (SRMs),
which SRK estimates to be in the order of 4.0% to 4.4% (based on the SRMs). The bias in the external duplicates report a slight
increase in the bias to 8.7%. SRK considers the level of bias to be within acceptable levels for use in the current Mineral Resource.
SRK noted some gaps for TiO
2
and Sc still remain within the database. The gaps in the database are a result of the current
re-assay program being limited to pulp material collected during the 2011 reanalysis program. Based on established relationships
and statistical analysis, SRK is comfortable to use the revised database for the current Mineral Resource Estimation.
Mineral Resources
utilized all the assay information from historical drilling and the NioCorp 2014 drilling program. Search distances were determined
from directional variograms calculated using the capped and composited samples. A nested search ellipse estimation method consisting
of three passes was used. The search ellipse has been rotated into the main dip and strike orientation of the deposit.
The grade estimation
(Nb
2
O
5
%, TiO
2
%, Sc_ppm) utilized an Ordinary Kriging (OK) algorithm supported by 5 m sample composites
for all the mineralized units, with Inverse Distance Weighting (IDW) to a power of 2, and a nearest neighbor estimate completed
as cross checks. Search distances were determined from directional variograms calculated using the capped and composited samples.
A nested search ellipse estimation method consisting of three passes was used. The search ellipse has been rotated into the main
dip and strike orientation of the deposit. Density has been assigned based on mean density per major geological unit from density
determination values taken during the 2014 estimation program, using a combination of weight in air/weight in water, and volumetric
analysis. Resources are reported as Nb
2
O
5
, TiO
2
and Sc (ppm).
Density has been estimated
based on density determination values taken during the 2014 resource estimation program, using a combination of weight in air/weight
in water, and volumetric analysis. Based on a statistical review of the density measurements and the assay results from the whole
rock analysis, which included Fe2O3% and TiO
2
%, a general trend of higher density with higher grade was identified and
therefore an Ordinary Kriged estimate of density was chosen as the preferred option.
SRK validated the
Mineral Resource Estimates using a number of different validation techniques:
|
·
|
Inspection of block grades in plan and section and comparison with drillhole grades;
|
|
·
|
Comparative statistical study vs. composite data and alternative estimation methods; and
|
|
·
|
Sectional interpretation of the mean block and sample grades (swath plots).
|
The Mineral Resources
have been confined to estimated blocks within the Carbonatite. In order to determine the quantities of material offering “reasonable
prospects for economic extraction” by an underground mining method, SRK has defined an underground mining cut-off grade (CoG)
based on assumed costs, pricing and metallurgical recoveries. Costs and recoveries are based on bench mark studies completed for
similar projects, and application of possible local variations. The blocks above the mining CoG form contiguous mining targets
without isolated blocks that would be unlikely to warrant the cost of development. All material within the geological wireframes
above a CoG of 0.3% Nb
2
O
5
has been considered to have reasonable prospects of being mined via underground
methods.
Table 3: SRK Mineral Resource Statement for Elk Creek, Effective
Date April 28, 2015
Classification
|
|
Cut-off
(Nb2O5%)
|
|
|
Tonnage
(000’s t)
|
|
|
Grade
(Nb2O5%)
|
|
|
Contained
Nb2O5
(000’s kg)
|
|
|
Grade
(TiO2%)
|
|
|
Contained
TiO2
(000’s kg)
|
|
|
Grade
(Sc g/t)
|
|
|
Contained Sc
(000’s kg)
|
|
Indicated
|
|
|
0.3
|
|
|
|
80,500
|
|
|
|
0.71
|
|
|
|
572,000
|
|
|
|
2.68
|
|
|
|
2,160,000
|
|
|
|
72
|
|
|
|
5,800
|
|
Inferred
|
|
|
0.3
|
|
|
|
99,600
|
|
|
|
0.56
|
|
|
|
558,000
|
|
|
|
2.31
|
|
|
|
2,300,000
|
|
|
|
63
|
|
|
|
6,300
|
|
|
(1)
|
Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. All
figures are rounded to reflect the relative accuracy of the estimate and have been used to derive sub-totals, totals and weighted
averages. Such calculations inherently involve a degree of rounding and consequently introduce a margin of error. Where these occur,
SRK does not consider them to be material. All composites have been capped where appropriate. The Concession is wholly owned by
and exploration is operated by NioCorp Developments Ltd.
|
|
(2)
|
The reporting standard adopted for the reporting of the MRE uses the terminology, definitions and
guidelines given in the CIM Standards on Mineral Resources and Mineral Reserves (May 10, 2014) as required by NI 43-101.
|
|
(3)
|
SRK reasonably expects The Elk Creek Project to be amenable to a variety of Underground Mining
methods. Using results from initial metallurgical testwork*, suitable underground mining and processing costs**, and forecast prices***,
SRK has reported the Mineral Resource at a cut-off of 0.3% Nb
2
O
5
. Other salable products (TiO
2
and Sc
2
O
3
) were given value based on fixed relationships to Nb
2
O
5
grade (3.5TiO
2
:1Nb
2
O
5
,
9Sc:1Nb
2
O
5
).
|
|
*
|
Average metallurgical recoveries are: Nb (60%), TiO
2
(58.7%), Sc
2
O
3
(14.1%)
|
|
**
|
Mining costs, processing costs, and G&A costs total $94.50/t
|
|
***
|
Metal price assumptions considered for the cutoff grade calculation are: Nb ($/kg 50.00), TiO
2
($/kg 2.50), Sc
2
O
3
($/kg 2,400.00)
|
|
(4)
|
SRK Completed a site inspection of the deposit by Mr. Martin Pittuck, MSc, CEng, MIMMM, an
appropriate “independent qualified person” as this term is defined in NI 43-101.
|
The Mineral Resource
presented has been reported following CIM guidelines. The PEA is preliminary in nature in that it includes a level of engineering
precision and assumptions which are currently considered too speculative to have the economic considerations applied to them that
would enable Mineral Resources to be categorized as Mineral Reserves.
Cautionary Note
to US Investors: The terms Indicated Resource and Inferred Resource as described in Table 3 above are as defined in Canadian National
Instrument 43-101. These terms are not defined under SEC Industry Guide 7 and are not recognized by the SEC. These estimated mineral
resources are not SEC Industry Guide 7 proven and probable reserves. See “Cautionary Note to US Investors Regarding Mineral
Reserve and Resource Estimates” above.
Environmental and Social
A number of key permits
and environmental management requirements have been identified for the Elk Creek Project, some of which need to be implemented
as soon as practicable in order to maintain the proposed Elk Creek Project schedule.
|
·
|
While not necessarily complex, the timing generally required to complete permitting through any
federal regulatory agency requires that NioCorp engage key agencies (in this case the USACE and possibly the U.S. EPA) early on
in Elk Creek Project development, and consider the siting and orientation of facilities carefully in order to minimized the risk
of a protracted National Environmental Policy Act analysis of the Elk Creek Project. At this time, the design emphasis on limiting
impacts to jurisdictional wetlands and waters of the U.S. will not result in need of an Environmental Assessment or Environmental
Impact Statement as the disclosure document for the USACE analysis of the Elk Creek Project.
|
|
·
|
Perhaps one of the most critical approvals likely to be needed by the operation will be a radioactive
materials license from the Nebraska Department of Health and Human Services (NDHHS), Office of Radiological Health. Because of
their limited experience with hardrock mining in the State of Nebraska, much less mining that includes Naturally Occurring Radioactive
Material (NORM), the NDHHS may require additional information and more time to approve the Elk Creek Project under a Broad Scope
License. Early and frequent engagement is a necessity with respect to this regulatory agency.
|
|
·
|
Documentation of existing baseline environmental conditions at the site was initiated in 2014 and
should continue throughout the permitting process. Additional studies will need to be added once regulatory authorities have been
given an opportunity to review the current mine plan presented in October 2015 PEA and assess their particular data needs for approval
of the Elk Creek Project.
|
|
·
|
Surface water monitoring should continue throughout the permitting process, and extend into construction
and operations as part of the Environmental Management System. Flow monitoring of all surface water sampling locations should be
added in order to calculate potential loading to the watershed(s). The Nebraska Department of Environmental Quality (NDEQ) Water
Quality Division will be engaged as soon as practicable in order to discuss the Elk Creek Project and potential data needs in order
to initiate National Pollutant Discharge Elimination System (NPDES) discharge permitting. This would include both local discharges
as well as discharges to the Missouri River.
|
|
·
|
A wetland delineation and potential jurisdictional waters assessment was conducted in late 2014
to identify wetland and drainage features within the proposed Project boundary which resulted in a formal JD being issued by the
USACE on September 6, 2016. A Pre-Construction Notification (PCN) was submitted to the USACE on March 24, 2017 under the USACE’s
Nationwide Permit 12 for the outfall structure of the Project’s proposed waterline to the Missouri River. Most of the rest
of the proposed 33-mile waterline is expected to move forward under the non-notifying provisions of Nationwide Permit 12.
|
|
·
|
A geochemical characterization program for the mineralized material, waste rock and tailings was
initiated by SRK for The Elk Creek Project. Preliminary results are provided in the October 2015 PEA, Section 20. Additional studies
are ongoing and final results will be available as part of the Feasibility Study.
|
|
·
|
Closure costs for The Elk Creek Project have been estimated at just over $60 million, the bulk
of which ($40 million) is intended for reclamation and closure of the tailings disposal facility. Approximately $15 million has
been allocated for surface reclamation of the remaining facilities (i.e., building demolition, site regrading and revegetation,
shaft closure, etc.), while the remaining $5 million is set aside for post-closure monitoring and maintenance. This estimate will
be refined during development of the feasibility study.
|
|
·
|
Community engagement has occurred in parallel with Nebraska field operations and has included public
meetings, presentations to public agencies, communications with local and state politicians, meetings with environmental groups,
and one-on-one meetings with area landowners.
|
Proposed Activities
During the
fourth quarter of the fiscal year ending June 30, 2017, our planned activities directed towards the Elk Creek
Project’s Feasibility Study are as follows:
|
|
Planned
Expenditures
($000)
|
|
Engineering Services
|
|
$
|
265
|
|
Metallurgy / Process Design
|
|
|
750
|
|
Project Infrastructure and Logistics
|
|
|
-
|
|
Geology & Resources
|
|
|
15
|
|
Market Economics
|
|
|
-
|
|
Land Agreements
|
|
|
10
|
|
Total
|
|
$
|
1,040
|
|
Note:
A portion of the work included in the table remains ongoing.
Following release of the Elk Creek Feasibility Study, the Company
anticipates that it may need to raise $5 million to $6 million to fund the next phase of the Project and move to construction start,
including the following: finalizing all necessary government permits required for construction operations; obtaining both debt
and equity financing for the Project; detailed engineering for the waterline; workforce expansion, including those related to mine
de-watering operations; and for general working capital.
Management is actively pursuing such additional sources of debt
and equity financing, and while it has been successful in doing so in the past, there can be no assurance it will be able to do
so in the future.
Legal
Proceedings
As of June 1, 2017,
we are not a party to any legal proceedings that could have a material adverse effect on the Company’s business, financial
condition or operating results. Further, to the Company’s knowledge no such proceedings have been threatened against the
Company.
Market
for Common Equity and Related Shareholder Matters
Market Information
The outstanding Common
Shares were first listed and posted for trading on the Vancouver Stock Exchange on December 1, 1987. On March 9, 2015, the Common
Shares commenced trading on the TSX under the trading symbol “NB”. In addition, the Company trades on the United States
Over-the-Counter Bulletin Board (“OTCBB”) and the OTCQX under the symbol “NIOBF” and on the Frankfurt Stock
Exchange as “BR3”.
The table below sets
forth the high and low closing prices of the Company’s Common Shares quoted on the OTCBB and OTCQX during the periods indicated
as reported by the Internet source OTC Markets (http://otcmarkets.com). The quotations reflect inter-dealer prices without retail
mark-up, mark-down or commission and may not reflect actual transactions.
Fiscal Quarter
|
|
2015
|
|
|
2016
|
|
|
|
Price Range
|
|
|
Price Range
|
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
First Quarter
|
|
$
|
0.710
|
|
|
$
|
0.505
|
|
|
$
|
0.650
|
|
|
$
|
0.480
|
|
Second Quarter
|
|
|
0.690
|
|
|
|
0.430
|
|
|
|
0.540
|
|
|
|
0.389
|
|
Third Quarter
|
|
|
1.446
|
|
|
|
0.606
|
|
|
|
0.857
|
|
|
|
0.375
|
|
Fourth Quarter
|
|
|
1.220
|
|
|
|
0.582
|
|
|
|
0.800
|
|
|
|
0.620
|
|
Fiscal Quarter
|
|
2017
|
|
|
|
Price Range
|
|
|
|
High
|
|
|
Low
|
|
First Quarter
|
|
$
|
0.765
|
|
|
$
|
0.610
|
|
Second Quarter
|
|
|
0.639
|
|
|
|
0.515
|
|
Third Quarter
|
|
|
0.666
|
|
|
|
0.512
|
|
Fourth Quarter (through June 2, 2017)
|
|
|
0.556
|
|
|
|
0.468
|
|
The closing sales
price of the Company’s Common Shares on the OTCQX as reported on June 2, 2017, was $0.54 per share.
The table below sets
forth the high and low closing prices in Canadian dollars of the Company’s Common Shares quoted on the TSX or TSX Venture
Exchange during the periods indicated as reported by the Internet source TMXmoney (http://www.tmxmoney.com). The quotations reflect
inter-dealer prices without retail mark-up, mark-down or commission and may not reflect actual transactions.
Fiscal Quarter
|
|
2015
|
|
|
2016
|
|
|
|
Price Range
|
|
|
Price Range
|
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
First Quarter
(1)
|
|
C$
|
1.76
|
|
|
C$
|
1.76
|
|
|
C$
|
0.09
|
|
|
C$
|
0.06
|
|
Second Quarter
|
|
|
1.54
|
|
|
|
1.54
|
|
|
|
0.69
|
|
|
|
0.53
|
|
Third Quarter
|
|
|
0.84
|
|
|
|
0.84
|
|
|
|
1.14
|
|
|
|
0.51
|
|
Fourth Quarter
|
|
|
0.69
|
|
|
|
0.69
|
|
|
|
1.13
|
|
|
|
0.53
|
|
Fiscal Quarter
|
|
2017
|
|
|
|
Price Range
|
|
|
|
High
|
|
|
Low
|
|
First Quarter
|
|
C$
|
1.00
|
|
|
C$
|
0.80
|
|
Second Quarter
|
|
|
0.86
|
|
|
|
0.67
|
|
Third Quarter
|
|
|
0.89
|
|
|
|
0.66
|
|
Fourth Quarter (through June 2, 2017)
|
|
|
0.74
|
|
|
|
0.60
|
|
|
(1)
|
The Company graduated its listing form the TSX Venture Exchange to the TSX on March 11, 2015.
|
The closing sales
price of the Company’s Common Shares on the TSX as reported on June 2, 2017, was C$0.69 per Common Share.
Holders
As of June 1, 2017,
we have 6,909
holders of record of the Common Shares.
Dividends
We have not paid any
cash dividends on the Common Shares since our inception and do not anticipate paying any cash dividends in the foreseeable future.
We plan to retain our earnings, if any, to provide funds for the expansion of our business.
Equity Compensation Plans
The Company has an
incentive stock option plan under which stock options are granted. Stock options have been determined by the Company’s directors
and are only granted in compliance with applicable laws and regulatory policy.
The following is provided
with respect to compensation plans (including individual compensation arrangements) under which equity securities are authorized
for issuance as of June 30, 2016.
Equity Compensation Plan Information
Plan Category and Description
|
|
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants, and Rights
(a)
|
|
|
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants, and Rights
(b)
|
|
|
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (a))
(c)
|
|
Equity Compensation Plans Approved by Security Holders
(1)
|
|
|
11,465,000
|
|
|
C$
|
0.69
|
|
|
|
6,581,799
|
|
Equity Compensation Plans Not Approved by Security Holders
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Total
|
|
|
11,465,000
|
|
|
C$
|
0.69
|
|
|
|
6,581,799
|
|
|
(1)
|
Represents options granted pursuant to the Company’s Option Plan.
|
Description of the Stock Option Plan:
On January 22, 2016,
NioCorp’s Board of Directors adopted the Stock Option Plan (the “Option Plan”).
During the fiscal
year ended June 30, 2016, the Compensation and Organization Committee (the “Compensation Committee”) approved all recommendations
for the grant of incentive stock options proposed by management, of which an aggregate of 1,600,000 (27%) were granted to Named
Executive Officers (“NEOs”), 2,450,000 (41%) were granted to directors who are not NEOs, and 1,825,000 (32%) were granted
to non-NEO employees and consultants.
As of June 1, 2017.
there are 16,605,000 stock options outstanding which represents, approximately 8.39%
of
the Company’s currently issued and outstanding Common Shares.
Purpose of the Plan
The Option Plan is
intended as an incentive to enable the Company to attract and retain qualified directors, officers, employees and consultants of
the Company and its affiliates, promote a proprietary interest in the Company and its affiliates among its employees, officers,
directors and consultants, and stimulate the active interest of such persons in the development and financial success of the Company
and its affiliates.
General Description of the Plan
The Option Plan is
administered by the Compensation Committee. Options are granted by the Board based upon the recommendations of the Compensation
Committee. The Option Plan will be effective until January 22, 2026, unless earlier terminated by the Board.
The Company’s
Option Plan is administered by the Compensation Committee, and is intended to advance the interests of the Company through the
motivation, attraction and retention of key employees, officers and directors of the Company and subsidiaries of the Company and
to secure for the Company and its shareholders the benefits inherent in the ownership of common shares of the Company by key employees,
officers, directors and consultants of the Company and subsidiaries of the Company. Grants of options under the Option Plan are
proposed/recommended by the CEO, and reviewed by the Compensation Committee. The Compensation Committee can approve, modify or
reject any proposed grants, in whole or in part. In general, the allocation of available options among the eligible participants
in the Option Plan is on an ad hoc basis, and there is no set formula for allocating available options, nor is there any fixed
benchmark or performance criteria to be achieved in order to receive an award of options. The Compensation Committee does not consider
the “value” of any such option grants in determining the number of options to award to any individual, as any such
“value” is an accounting measure that is not relevant to incentivizing the individual. The timing of the grants of
options is determined by the Compensation Committee, and there is no regular interval for the awarding of option grants. In general,
a higher level of responsibility will attract a larger grant of options. Because the number of options available is limited, in
general, the Compensation Committee aims to have individuals at what it subjectively considers to be the same levels of responsibility
holding equivalent numbers of options, with additional grants being allocated for individuals who the Compensation Committee believes
are in a position to more directly affect the success of the Company through their efforts. The Compensation Committee looks at
the overall number of options held by an individual (including the exercise price and remaining term of existing options and whether
any previously granted options have expired out of the money or were exercised) and takes such information into consideration when
reviewing proposed new grants. After considering the CEO’s recommendations and the foregoing factors, the resulting proposed
option grant (if any) is then submitted to the Board for approval.
A brief description
of the Option Plan is as follows:
|
1.
|
Options may be granted to Employees, Senior Officers, Directors, Non-Employee Directors, Management
Company Employees, and Consultants (all as defined in the Option Plan) of the Company and its affiliates who are, in the opinion
of the Compensation Committee, in a position to contribute to the success of the Company or any of its affiliates.
|
|
2.
|
The aggregate number of common shares that may be issuable pursuant to options granted under the
Option Plan at any particular time (together with those common shares which may be issued pursuant to any other security-based
compensation plan(s) of the Company or any other option(s) for services granted by the Company at such time), unless otherwise
approved by shareholders, may not exceed that number which is equal to 10% of the common shares issued and outstanding at such
time. For greater certainty, in the event options are exercised, expire or otherwise terminate, the Company may (subject to such
10% limit) grant an equivalent number of new options under the Option Plan and the Company may (subject to such 10% limit) continue
to grant additional options under the Option Plan as its issued capital increases, even after the Option Plan has received regulatory
acceptance and shareholder approval.
|
|
3.
|
The number of common shares subject to each option will be determined by the Board at the time
of grant (based upon the recommendations of the Compensation Committee), provided that:
|
|
(a)
|
the maximum aggregate number of common shares reserved for issuance pursuant to options granted
under the Option Plan and any other share compensation arrangements of the Company for issuance to insiders at any particular time
may not exceed 10% of the issued common shares at such time; and
|
|
(b)
|
the number of common shares issued to insiders pursuant to the Option Plan (together with any common
shares issued to insiders pursuant to any other share compensation arrangements of the Company) within a 12-month period may not
exceed 10% of the issued and outstanding number of common shares.
|
Subject to the overall
10% limit described in 2 above, and the limitations on options to insiders as set forth above, there is no maximum limit on the
number of options which may be granted to any one person.
|
4.
|
The exercise price of an option will be set by the Compensation Committee in its discretion, but
such price shall be not less than the greater of:
|
|
(a)
|
the “volume weighted average trading price” - calculated based on the VWAP during the
five trading days immediately prior to the date of grant); and
|
|
(b)
|
the closing price of the common shares on the TSX on the day prior to the option grant.
|
|
5.
|
Options may be exercisable for a period of up to ten years from the date of grant. The Option Plan
does not contain any specific provisions with respect to the causes of cessation of entitlement of any optionee to exercise his
option, provided, however, that the Board may, at the time of grant, determine that an option will terminate within a fixed period
(which is shorter than the option term) upon the ceasing of the optionee to be an eligible optionee (for whatever reason) or upon
the death of the optionee, provided that, in the case of the death of the optionee, an option will be exercisable only within one
year from the date of the optionee’s death.
|
|
6.
|
Notwithstanding the expiry date of an option set by the Board, the expiry date will be adjusted,
without being subject to the discretion of the Board or the Compensation Committee, to take into account any blackout period imposed
on the optionee by the Company. If the expiry date falls within a blackout period, then the expiry date will be the close of business
on the tenth business day after the end of such blackout period. Alternatively, if the expiry date falls within two business days
after the end of such a blackout period, then the expiry date will be the difference between 10 business days reduced by the number
of business days between the expiry date and the end of such blackout period.
|
|
7.
|
The Option Plan does not provide for any specific vesting periods. The Compensation Committee may,
at the time of grant of an option, determine when that option will become exercisable and any applicable vesting periods, and may
determine that that option will be exercisable in installments.
|
|
8.
|
On the occurrence of a takeover bid, issuer bid or going private transaction, the Board has the
right to accelerate the date on which any option becomes exercisable and may, if permitted by applicable legislation, permit an
option to be exercised conditional upon the tendering of the common shares thereby issued to such bid and the completion of, and
consequent taking up of such common shares under, such bid or going private transaction.
|
|
9.
|
Options are non-assignable except in the event of the death of the optionee, and may, during his/her
lifetime, only be exercised by the optionee.
|
|
10.
|
The exercise price per optioned share under an option may be reduced, at the discretion of the
Board (upon the recommendation of the Compensation Committee), if:
|
|
(a)
|
at least six months has elapsed since the later of the date such option was granted and the date
the exercise price for such option was last amended; and
|
|
(b)
|
shareholder approval is obtained, including disinterested shareholder approval if required by the
TSX.
|
|
11.
|
The present policy of the Board is not to provide any financial assistance to any optionee in connection
with the exercise of any option.
|
|
12.
|
The present policy of the Board is not to transform an option granted under the Option Plan into
a stock appreciation right.
|
|
13.
|
If there is any change in the number of common shares outstanding through any declaration of a
stock dividend or any consolidation, subdivision or reclassification of the common shares, the number of shares available under
the Option Plan, the shares subject to any granted stock option and the exercise price thereof will be adjusted proportionately,
subject to any approval required by the TSX. If the Company amalgamates, merges or enters into a plan of arrangement with or into
another corporation, and the Company is not the surviving or acquiring corporation, then, on any subsequent exercise of such option,
the optionee will receive such securities, property or cash which the optionee would have received upon such reorganization if
the optionee had exercised his or her option immediately prior to the record date.
|
|
14.
|
The Option Plan provides that, subject to the policies, rules and regulations of any lawful authority
having jurisdiction (including the TSX), the Board may, at any time, without further action or approval by the shareholders of
the Company, amend the Option Plan or any option granted under the Plan in such respects as it may consider advisable and, without
limiting the generality of the foregoing, it may do so to:
|
|
(a)
|
ensure that the options granted under the Option Plan will comply with any provisions respecting
stock options under tax and other laws in force in any country or jurisdiction of which a optionee to whom an option has been granted
may from time to time be resident or a citizen;
|
|
(b)
|
make amendments of an administrative nature;
|
|
(c)
|
correct any defect, supply any omission or reconcile any inconsistency in the Option Plan, any
option or option agreement;
|
|
(d)
|
change vesting provisions of an option or the Option Plan;
|
|
(e)
|
change termination provisions of an option provided that the expiry date does not extend beyond
the original expiry date;
|
|
(f)
|
add or modify a cashless exercise feature providing for payment in cash or securities upon the
exercise of options;
|
|
(g)
|
make any amendments required to comply with applicable laws or the requirements of the TSX or any
regulatory body or stock exchange with jurisdiction over the Company;
|
|
(h)
|
add or change provisions relating to any form of financial assistance provided by the Company to
participants under the Option Plan that would facilitate the purchase of securities under the Option Plan;
|
provided that shareholder approval shall
be obtained for any amendment that results in:
|
·
|
an increase in the common shares issuable under options granted pursuant to the Option Plan;
|
|
·
|
a change in the persons who qualify as participants eligible to participate under the Option Plan;
|
|
·
|
a reduction in the exercise price of an option;
|
|
·
|
the cancellation and reissuance of any option;
|
|
·
|
the extension of the term of an option;
|
|
·
|
a change in the insider participation limit;
|
|
·
|
options becoming transferable or assignable other than for the purposes described in section 10
of the Option Plan; and
|
|
·
|
a change in the amendment provisions contained in the Option Plan.
|
Other Compensation Arrangements:
Other than the Option
Plan, the Company does not have any other compensation arrangements.
Management’s
Discussion and Analysis of
Financial Condition and Results of Operations
The following discussion
provides information regarding the results of operations for the years ended June 30, 2016 and 2015 and the three and nine months
ended March 31, 2017 and 2016, and our financial condition, liquidity and capital resources as of March 31, 2017, and June 30,
2016 and 2015. The financial statements and the notes thereto contain detailed information that should be referred to in conjunction
with this discussion.
The following discussion
and analysis should be read in conjunction with and our historical consolidated financial statements and the accompanying notes
included elsewhere in this prospectus, as well as the Risk Factors and the Cautionary Note Regarding Forward-Looking Statements
included above.
Company Overview
NioCorp is developing
the Elk Creek Project, located in southeast Nebraska. The Elk Creek Project is an advanced niobium and scandium exploration project
that also contains Titanium. Niobium is used to produce HSLA steel, which is a lighter, stronger steel used in automotive, structural,
and pipeline applications. Scandium can be combined with Aluminum to make an alloy with increased strength and improved corrosion
resistance. Scandium also is a critical component of advanced solid oxide fuel cells. Titanium is a key component of pigments used
in paper, paint, and plastics, and is also used for aerospace applications, armor, and medical implants.
Our primary business
strategy is to advance our Elk Creek Project to commercial production. We are focused on obtaining additional funds to carry out
our near-term planned work programs to complete a feasibility study for the Elk Creek Project and to begin development. Subject
to delivering a positive feasibility study for the Elk Creek Project, we intend to secure the project financing necessary to complete
mine development and construction of the Elk Creek Project.
The Company also holds
a position in a mineral exploration property located in Canada. At the present time, this property does not comprise a material
aspect of the Company’s business operations. Please refer to “Item 2 – Properties” above for further detail
regarding the Company’s mineral exploration properties.
2016 Highlights
The following highlights
are from the year ended June 30, 2016:
Strategic
|
·
|
The Company continued to make progress with respect to completing a feasibility study for its Elk
Creek Project, which included bench and pilot scale metallurgical testing to provide data for the Feasibility Study plant design.
On June 23, 2016, we announced the successful completion of a Whole Ore Pre-Leach Pilot Plant (WPL). The WPL validated results
from earlier bench-scale testing and paves the way for the remaining Feasibility Study pilot plants to commence at the SGS facility.
|
|
·
|
During 2016, the Company continued to make progress with respect to ongoing permitting activities
with the USACE, the state of Nebraska and Johnson County, Nebraska and advanced hydrogeologic modelling of the regional aquifer
associated with the Mineral Resource.
|
|
·
|
On June 15, 2016, we announced that we had entered into the CMC Agreement under which CMC expects
to purchase up to a maximum of 1,875 tonnes per year, or roughly twenty-five (25%), of our potential annual Ferroniobium production
from our Elk Creek, Nebraska resource. Under the CMC Agreement, CMC will purchase this amount of Ferroniobium under a market-based
pricing structure for an initial 10-year term, with an option to extend beyond that period upon mutual agreement of the parties.
|
|
·
|
In March of 2016, the Company conducted another in a series of Town Hall meetings with residents
of Eastern Nebraska to discuss its Elk Creek Project. A capacity crowd of nearly 400 residents attended, with strong and vocal
support expressed for the project by many residents.
|
|
·
|
The Company conducted its 2016 Annual Meeting on February 23, 2016. In addition to approving the
reelection of all Board members standing for reelection, shareholders also elected Anna Castner Wightman, to the Board. Ms. Wightman
is a sixth generation Nebraskan who currently serves as Vice President of Government Relations for First National Bank in Omaha,
Nebraska.
|
|
·
|
On October 16, 2015, the Company announced that, as a result of a review by the British Columbia
Securities Commission, it had filed an amendment to its second Preliminary Economic Assessment, filed in Canada on September 4,
2015, for the Elk Creek Project. The October 2015 PEA retains the technical and economic results previously disclosed by NioCorp
in its August 4, 2015 and September 4, 2015 news releases, and includes additional guidance and cautionary language required by
NI 43-101 regarding uncertainty in realizing the results of the October 2015 PEA.
|
|
·
|
On August 4, 2015, the Company announced that during bench and pilot testing of the metallurgical
flowsheet for the proposed plant, it was determined that recoveries could be significantly increased by eliminating the flotation
step and processing the resource directly through a hydrometallurgical process. Subsequently, on September 4, 2015, the Company
filed in Canada a second Preliminary Economic Assessment regarding the Elk Creek Project.
|
|
·
|
On September 17, 2015, the Company announced the production of Ferroniobium using feed material
from the Elk Creek Resource that meets specifications for commercial sale. The Ferroniobium was produced during pyrometallurgical
testing conducted at Kingston Process Metallurgy Inc. (“KPM”) in Kingston, Ontario.
|
|
·
|
In July 2015, the Company completed diamond drill holes at the prospective locations of the mine
shaft and the ventilation raise. The data collected from these holes will assist in developing cost estimates for the establishment
of these key components of the mine infrastructure, and will serve to reduce risk in these areas of the project.
|
Financing and Other
|
·
|
On June 17, 2016, we completed a warrant exercise program resulting in gross proceeds of C$4.8
million. A total of approximately 7.4 million C$0.65 share purchase warrants expiring November 10, 2016 were exercised. Each holder
who exercised one warrant during the program received 1.11029 Common Shares, representing one Common Share and 0.11029 of a Common
Share, as the incentive portion. The program had been previously approved by our shareholders on May 17, 2016.
|
|
·
|
On January 19, 2016, the Company announced the closing of a non-brokered private placement of 9,074,835
Units of the Company at a price of C$0.57 per Unit, which raised gross proceeds of C$5.2 million. Each Unit warrant is exercisable
to acquire one additional Common Share for a period of 3 years at a price of C$0.75 per Common Share.
|
|
·
|
On December 15, 2015, the Company announced the signing of the Lind Agreement. Through December
31, 2015, an initial $4.0 million was funded pursuant to the issuance of an initial convertible security (“Convertible Security”),
with an additional $0.5 million received as of January 19, 2016, on the issuance of a further equivalent amount of the Convertible
Security, including interest. The Convertible Security is for a term of two years, and carries prepaid interest at a rate of 10%
per annum. Lind can increase the funding under the Convertible Security by an additional $1.0 million during its two-year term.
Further, provided certain conditions are met, the Company will have the right to call an additional $1.0 million under the initial
Convertible Security.
|
|
·
|
In November 2, 2015, the Company announced the appointment of Jim Sims to the position of Vice
President of External Affairs. In this capacity, Mr. Sims manages investor relations, media relations, marketing, and government
affairs.
|
|
·
|
On October 22, 2015, the Company announced the closing of a non-brokered private placement of unsecured
convertible promissory notes (the “Notes”), for gross proceeds $0.8 million (the “Private Placement”).
|
|
·
|
On July 1, 2015, the Company entered into a non-revolving credit facility agreement in the amount
of $2 million with Mr. Mark Smith, under which $0.5 million was drawn down. The arrangement bears an interest rate of 10%,
is secured by the Company’s assets pursuant to a general security agreement, is subject to both a 2.5% establishment fee
and 2.5% prepayment fee, and became due and payable on June 17, 2016.
|
Results of Operations
Comparison of Year Ended June 30, 2016 to June 30, 2015
|
|
For the year ended
June 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
($000)
|
|
Operating expenses
|
|
$
|
9,518
|
|
|
$
|
25,480
|
|
Net loss
|
|
$
|
11,408
|
|
|
$
|
23,115
|
|
Net loss per share (basic and diluted)
|
|
$
|
0.07
|
|
|
$
|
0.17
|
|
The Company’s
net loss decreased to $11.4 million for 2016 from $23.1 million for 2015. These changes resulted primarily from decreased exploration
activities as work efforts transitioned from on-site drilling and related metallurgical testing to engineering efforts related
to the in-process feasibility study.
During the years ended
June 30, 2016 and 2015, the Company had no revenues. Operating expenses incurred related primarily to performing exploration activities,
as well as the activities necessary to support corporate and shareholder duties, and are detailed in the following table.
|
|
For the year ended
June 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
($000)
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Consulting
|
|
$
|
201
|
|
|
$
|
242
|
|
Depreciation
|
|
|
9
|
|
|
|
10
|
|
Employee related costs
|
|
|
1,988
|
|
|
|
3,413
|
|
Finance costs
|
|
|
242
|
|
|
|
39
|
|
Professional fees
|
|
|
512
|
|
|
|
435
|
|
Exploration expenditures
|
|
|
4,719
|
|
|
|
18,051
|
|
Other operating expenses
|
|
|
1,847
|
|
|
|
3,178
|
|
Impairment of equipment
|
|
|
–
|
|
|
|
112
|
|
Total operating expenses
|
|
|
9,518
|
|
|
|
25,480
|
|
|
|
|
|
|
|
|
|
|
Change in financial instrument fair value
|
|
|
2,719
|
|
|
|
–
|
|
Other gains
|
|
|
(587
|
)
|
|
|
|
|
Interest and other income
|
|
|
–
|
|
|
|
(16
|
)
|
Foreign exchange (gain) loss
|
|
|
(528
|
)
|
|
|
434
|
|
Interest expense
|
|
|
275
|
|
|
|
–
|
|
Loss (gain) on available for sale securities
|
|
|
11
|
|
|
|
(28
|
)
|
Income tax expense (benefit)
|
|
|
–
|
|
|
|
(2,755
|
)
|
Net Loss
|
|
$
|
11,408
|
|
|
$
|
23,115
|
|
Overall decreases
in operating expenses reflect decreased exploration expenditures as compared to the prior year. Significant items affecting operating
expenses are noted below:
Employee related costs
decreased from $3.4 million in 2015 to $2.0 million in 2016 primarily due to a $1.6 million decrease in share-based compensation
costs reflecting the timing and amount of stock option grants, as well as changes in vesting periods. Options granted in 2015 were
vested immediately, resulting in 100% of the value being expensed upon grant. Options granted in 2016 vest over an 18-month period,
and the corresponding option value is being expensed over the vesting period. This decrease in share-based compensation expense
was partially offset by a $0.2 million increase related to headquarters personnel costs to support increased financing efforts
and general operational activities.
Finance costs
represent fees and costs associated with financial transactions. Costs incurred for 2016 primarily reflect Lind Agreement transaction
costs.
Exploration expenditures
decreased to $4.7 million (2015: $18.1 million) reflecting the timing of expenditures at the Elk Creek Project. 2016 expenditures
primarily related to engineering and metallurgical testing work in support of our feasibility study, while 2015 costs included
$10.3 million for drilling, metallurgical work, and geologists and field staff, which was necessary to support the preparation
and filing of an updated Canadian National Instrument 43-101 Mineral Resource Statement and the completion of a Preliminary Economic
Assessment. The following table provides additional details on exploration expense by period:
|
|
Year ended June 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
($000)
|
|
Feasibility study and engineering
|
|
$
|
2,671
|
|
|
$
|
5,892
|
|
Field management and other
|
|
|
940
|
|
|
|
1,791
|
|
Drilling
|
|
|
197
|
|
|
|
4,976
|
|
Metallurgical
|
|
|
844
|
|
|
|
4,506
|
|
Geologists and field staff
|
|
|
67
|
|
|
|
886
|
|
Total
|
|
$
|
4,719
|
|
|
$
|
18,051
|
|
Other operating expenses
include investor relations, general office expenditures, stock and proxy expenditures and other miscellaneous costs. Costs incurred
during 2016 include $525,000 relating to the fair value of additional shares issued in connection with the warrant exercise program
discussed below under “
Recent Financing Activities
”. Similarly, 2015 costs include $2,159,000 relating to the
fair value of warrants issued to MRCC in connection with the 2015 Offering discussed above under “
Financing
”
and warrants issued in connection with the offtake agreement discussed below under “
Contractual Obligations and Off Balance
Sheet Arrangements
”.
Other significant
items impacting the change in the Company’s net loss are noted below:
Change in financial instrument
fair value
represents non-cash changes in the market value of the Convertible Security, which is carried at Fair value, as
well as changes in the market value of the derivative liability component of the Notes.
Other gains
recorded
in 2016 represents the one-time reversal of a Canadian tax-related accrual associated with flow-through capital shares issued in
2010.
Foreign exchange (gain) loss
is primarily due to changes in the United States dollar (“USD”) against the Canadian dollar (“CAD”). And
reflects the timing of foreign currency transactions and subsequent changes in exchange rates. The gain recorded in 2016 primarily
relates to the USD-denominated Convertible Security, which is recorded on the Canadian parent company books.
Interest expense
represents
interest incurred in connection with loans from Mark A. Smith and the Notes. Increases in 2016 over 2015 are based on the timing
of the closing of the individual debt instruments.
Income tax benefit
booked
in 2015 reflects the recognition of $2.8 million of deferred tax benefit which was generated during 2015 to offset existing deferred
tax liabilities associated with the acquisition of the Elk Creek mineral interest.
Comparison of Nine Month Period Ended March 31, 2017 to
March 31, 2016
Financial and Operating Results
The Company continues to expense all expenditures
when incurred, except for equipment, which is capitalized. The Company has no revenues from mining operations. Operating expenses
incurred related primarily to performing exploration activities, as well as the activities necessary to support corporate and shareholder
duties, and are detailed in the following table ($000).
|
|
For the three months ended
March 31,
|
|
|
For the nine months ended
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
$
|
-
|
|
|
$
|
27
|
|
|
$
|
1
|
|
|
$
|
158
|
|
Depreciation
|
|
|
3
|
|
|
|
3
|
|
|
|
7
|
|
|
|
7
|
|
Employee-related costs
|
|
|
578
|
|
|
|
732
|
|
|
|
1,614
|
|
|
|
1,252
|
|
Finance costs
|
|
|
4
|
|
|
|
(38
|
)
|
|
|
4
|
|
|
|
240
|
|
Professional fees
|
|
|
133
|
|
|
|
151
|
|
|
|
745
|
|
|
|
273
|
|
Exploration expenditures
|
|
|
2,761
|
|
|
|
566
|
|
|
|
7,128
|
|
|
|
2,962
|
|
Other operating expenses
|
|
|
596
|
|
|
|
442
|
|
|
|
906
|
|
|
|
933
|
|
Total operating expenses
|
|
|
4,075
|
|
|
|
1,883
|
|
|
|
10,405
|
|
|
|
5,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in financial instrument fair value
|
|
|
524
|
|
|
|
1,132
|
|
|
|
189
|
|
|
|
2,501
|
|
Foreign exchange loss (gain)
|
|
|
(80
|
)
|
|
|
(686
|
)
|
|
|
113
|
|
|
|
(489
|
)
|
Interest expense
|
|
|
78
|
|
|
|
62
|
|
|
|
218
|
|
|
|
203
|
|
Loss (gain) on available for sale securities
|
|
|
12
|
|
|
|
19
|
|
|
|
6
|
|
|
|
13
|
|
Loss before income taxes
|
|
|
4,609
|
|
|
|
2,410
|
|
|
|
10,931
|
|
|
|
8,053
|
|
Income tax expense
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
Net Loss
|
|
$
|
4,609
|
|
|
$
|
2,410
|
|
|
$
|
10,931
|
|
|
$
|
8,053
|
|
Nine months ended March 31, 2017 compared
to nine months ended March 31, 2016
Significant items
affecting operating expenses are noted below:
Employee related
costs
increased primarily due to increased share-based compensation costs reflecting the timing of option issuances, as well
as the number of options granted and associated fair value calculations, as well as the impact of additional personnel costs to
support finance and external communications activities.
Professional fees
include legal and accounting services, and increased $0.5 million. This increase reflects costs associated with registration statements
filed with the SEC and ongoing compliance efforts. The Company expects that professional fees through the remainder of the fiscal
year will return to historical levels as the Company has completed the transition to being a reporting issuer with the SEC.
Exploration expenditures
increased $4.2 million, reflecting the timing of expenditures at the Elk Creek Project as discussed above under “
Elk Creek
Project Update
.” 2017 expenditures primarily related to engineering and metallurgical bench and pilot plant testwork
in support of our continuing Feasibility Study work, while 2016 costs were primarily directed towards engineering costs in support
of the Preliminary Economic Assessment studies that were completed that year.
Other operating
expenses
include investor relations, general office expenditures, stock and proxy expenditures and other miscellaneous costs.
The decline in expenditures was related to financing-related costs incurred in 2016.
Other significant
items impacting the change in the Company’s net loss are noted below:
Change in financial
instrument fair value
represents non-cash changes in the market value of the Convertible Security, which is carried at fair
value, as well as changes in the market value of the derivative liability component of the Convertible Notes and the fair market
value of warrants issued in connection with the Convertible Security. Overall, the decline in expenses relates to fair value amounts
ascribed to the Convertible Security at original issuance.
Foreign exchange
(gain) loss
is primarily due to changes in the United States dollar (“USD”) against the Canadian dollar, and reflects
the timing of foreign currency transactions and subsequent changes in exchange rates. The impacts in both periods primarily relates
to the impact of changing foreign currency rates as applied to the USD-denominated convertible debt instruments and related party
debt, which are recorded on the Canadian parent company books.
Three months ended
March 31, 2017 compared to three months ended March 31, 2016
Operating expenses
increased $2.2 million, reflecting the timing of expenditures at the Elk Creek Project as discussed above under “
Elk Creek
Project Update
.” Other impacts to net loss include declines in both change in financial instrument fair value and foreign
exchange gain as discussed above under “
Nine months ended March 31, 2017 compared to nine months ended March 31, 2016
.”
Recent Financing Activities
During the three years
preceding the date hereof, the Company has granted an aggregate total 20,105,000 incentive stock options and issued 52,962,405
share purchase warrants. During the three years preceding the date hereof, the Company’s option holders have exercised an
aggregate total of 9,455,000 incentive stock options and warrant holders have exercised an aggregate total of 23,100,971 share
purchase warrants.
On November 10, 2014,
the Company closed a partially brokered and partially non-brokered private placement of 19,245,813 special warrants (“2014
Special Warrants”) at an issue price of C$0.55 per 2014 Special Warrant to raise aggregate gross proceeds of C$10,585,197
(the “2014 Offering”). The brokered portion of the 2014 Offering was completed using MRCC, and each 2014 Special Warrant
was exchangeable for no additional consideration into one unit of the Company (a “2014 Unit”). Each 2014 Unit consisted
of one Common Share and one Common Share purchase warrant (a “2014 Warrant”). Each 2014 Warrant entitles the holder
to acquire one Common Share at a price of C$0.65 until November 10, 2016. MRCC received C$112,917.59 and 205,304 options to acquire
2014 Units in consideration of its services in connection with the 2014 Offering. On January 15, 2015, the Company announced it
had filed and obtained a receipt from the British Columbia Securities Commission for a final short form prospectus dated January
14, 2015. The receipt also evidences that the Ontario Securities Commission has received the filing, as well as regulators in Alberta
and New Brunswick under the Multilateral Instrument 11-102 Passport System. That prospectus qualified the distribution of 19,245,813
2014 Units underlying the 2014 Special Warrants pursuant to the terms thereof, which were deemed to be issued on January 19, 2015.
Proceeds of the Special Warrant private placement were to be used to advance the Elk Creek Property and for general working capital.
On November 10, 2014,
the Company entered into the TK Agreement whereby TK will purchase approximately 3,750 tonnes or roughly 50 per cent of the Company’s
planned ferro-niobium production from its Elk Creek Project for an initial 10-year term, with an option to extend beyond that time
frame. The agreement presupposes the Company obtaining project financing, obtaining all necessary approvals and constructing a
mine at the Elk Creek Project. Pursuant to the agreement with TK, the Company also granted TK a non-transferable warrant entitling
TK to acquire 8,569,000 Common Shares at an exercise price of C$0.67 until December 12, 2015.
Pursuant to a financial
services advisory agreement with MRCC, the Company issued 500,000 advisory warrants on December 4, 2014 and 250,000 advisory warrants
on January 14, 2015 (the “Advisory Warrants”). Each Advisory Warrant entitled MRCC to purchase a unit of the Company
at a price of C$0.55 each, on or before December 4, 2016 (each an “Advisory Unit”). Each Advisory Unit consisted of
one Common Share and one warrant exercisable at a price of C$0.65 per share until December 4, 2016. These Advisory Warrants were
exercised during the three-month period ended March 31, 2016, resulting in gross proceeds to the Company of C$412,500, the issuance
of 750,000 Common Shares and granting of an additional 750,000 warrants comprised in the Advisory Units.
Pursuant to a sponsorship
agreement between MRCC and the Company in connection with the Company’s graduation to the Toronto Stock Exchange, the Company
issued 250,000 agent’s sponsorship warrants on January 14, 2015 (the “Sponsor Warrants”), entitling MRCC to purchase
a unit of the Company (the “Sponsor Units”) at C$0.60 per Sponsor Unit until January 14, 2017. Each Sponsor Unit consisted
of one common Share and one warrant exercisable at C$0.65 per share until January 14, 2017. These Sponsor Warrants were exercised
during the year ended June 30, 2016, resulting in gross proceeds to the Company of C$150,000, the issuance of 250,000 Common Shares
and the granting of an additional 250,000 warrants comprised in the Sponsor Units.
On February 27, 2015,
the Company announced that it had closed a bought deal private placement offering with MRCC consisting of 2,914,000 special warrants
(“2015 Special Warrants”), including the exercise of 15% over-allotment option in full, at an issue price of C$0.75
per 2015 Special Warrant for aggregate gross proceeds of C$2,185,500 (the “2015 Offering”). Each 2015 Special Warrant
was exchangeable for no additional consideration into one unit of the Company (a “2015 Unit”). Each 2015 Unit consisted
of one Common Share and one Common Share purchase warrant (a “2015 Warrant”). Each 2015 Warrant entitles the holder
to acquire one Common Share at a price of C$1.00 until February 27, 2017.
In consideration for
its services in connection with the 2015 Offering, MRCC received a cash commission of C$137,183 and 182,910 non-transferable Compensation
Options (“Compensation Options”). Each Compensation Option entitles MRCC to purchase one Common Share at a price of
C$0.85 for a period of 24 months from the closing date of the 2015 Offering. On March 26, 2015, the Company announced it had filed
and obtained a receipt from the securities regulators in British Columbia, Ontario, Alberta and Saskatchewan for a final short
form prospectus dated March 23, 2015. That prospectus qualified the distribution of 2,914,000 2015 Units issuable pursuant to the
terms thereof, which were deemed to be exercised on Monday, March 30, 2015.
On March 5, 2015,
the Company announced that it obtained in-principle eligibility approval for a loan guarantee to be provided by the Federal Republic
of Germany which will support the Company’s debt financing strategy. This approval, which is the first of four approvals,
is based on the signed offtake agreement discussed below under “Three Year History of Material Corporate Agreements”,
and demonstrates that the Elk Creek Project will contribute in securing strategic raw materials supplies for Germany and that the
supply of Ferroniobium is in the economic interest of Germany. In addition, NioCorp appointed Northcott Capital Limited as its
financial advisor with respect to project debt financing for the development of the Elk Creek Project.
On June 17, 2015,
the Company entered into the Original Smith Loan in the amount of $1.5 million with Mark Smith. Additionally, on July 1, 2015,
the Company entered into a non-revolving credit facility agreement in the amount of $2.0 million with Mr. Smith, and drew
down $0.5 million. Both arrangements (collectively, the “Smith Loans”) bear an interest rate of 10%, are secured by
the Company’s assets pursuant to a general security agreement, are subject to both a 2.5% establishment fee and 2.5% prepayment
fee, and become due and payable on June 17, 2016. In January 2016, Company repaid $1.1 million of the outstanding Smith Loans,
representing 100% of amounts drawn down under the credit facility, plus $0.5 million of the amount due under the Original Smith
Loan. On July 19, 2016, the Company announced an extension of the Original Smith Loan until June 17, 2017. Total indebtedness under
the Original Smith Loan as of March 31, 2017, was $1.0 million.
On October 22, 2015,
the Company announced that it had closed a non-brokered private placement of unsecured convertible promissory notes (the “Notes”),
for gross proceeds of up to $0.8 million. The Notes bear interest at a rate of 8%, payable annually in arrears, are non-transferable
and have a term of three years from the date of issue. Principal under the Notes is convertible by lenders into, and payable by
the Company in, Common Shares of the Company at a conversion price of C$0.97 per common share, calculated on conversion or repayment
using the then-current Bank of Canada noon exchange rate. Accrued but unpaid interest on the Notes will be convertible by lender
into, and payable by the Company in, Common Shares at a price per Common Share equal to the most recent closing price of the Company’s
Common Shares prior to the delivery to the Company of a request to convert interest, or the annual due date of interest, as applicable,
calculated using the then-current Bank of Canada noon exchange rate. Total indebtedness under the Notes as of March 31, 2017, was
$0.8 million.
On December 15, 2015,
the Company announced that it would conduct a private placement of up to nine million Units of the Company at a price of C$0.57
per Unit to raise gross proceeds of up to C$5.13 million (the “December Private Placement”). On January 19, 2016, the
Company announced the closing of the December Private Placement on an oversubscribed basis and issued 9,074,835 Units of the Company
at a price of C$0.57 per Unit, which raised total gross proceeds of C$5.2 million. Each Unit warrant is exercisable to acquire
one additional Common Share of the Company for a period of 3 years at a price of C$0.75 per Common Share. In addition, the Company
issued 75,450 broker warrants at closing, each having the same terms as a Warrant, with the exception of transferability.
On December 15, 2015,
the Company announced the signing of a definitive convertible security funding agreement (the “Lind Agreement”) with
Lind Asset Management IV, LLC (“Lind”). Through December 31, 2015, an initial $4.0 million was funded pursuant to the
issuance of an initial convertible security (“Convertible Security”), with an additional $0.5 million received as of
January 19, 2016, on the issuance of a further equivalent amount of the Convertible Security, including interest. Lind can increase
the funding under the Convertible Security by an additional $1.0 million during its two-year term. Further, provided certain conditions
are met, the Company will have the right to call an additional $1.0 million under the initial Convertible Security.
On December 22, 2015,
the Company closed the first tranche of its private placement with Lind, which comprised an aggregate of (received in tranches
ending January 19, 2016) $4.5 million principal amount 10% secured Convertible Security and 3,125,000 transferable Common Share
purchase warrants (the “Lind Warrants”). The Convertible Security has a term of two years from its date of issuance,
and interest on the Convertible Security is prepaid and added to its principal amount; accordingly, the initial face value of the
Convertible Security is $5.4 million, and the yield of the Convertible Security (if held, unconverted, to maturity) will be 10%
per annum, or $0.9 million. Each Lind Warrant entitles the holder to purchase one additional Common Share at a price of C$0.72
on or before December 22, 2018. The Convertible Security and Lind Warrants were issued pursuant to the Lind Agreement. The Convertible
Security is convertible into Common Shares of the Company at a conversion price equal to 85% of the VWAP (in Canadian dollars)
for the five (5) consecutive trading days immediately prior to the date on which Lind provides the Company with notice of its intention
to convert an amount of the Convertible Security from time to time. The issuance of the Convertible Security and the Lind Warrants
was completed on a non-brokered private placement basis. The Convertible Security is classified as a compound financial instrument
for accounting purposes. Because the Convertible Security is denominated in a currency that is different from the Company’s
functional currency, both the liability and conversion components are carried as borrowings. The Convertible Security is secured
by the assets of the Company, being the shares of its subsidiaries 0896800 and ECRC. The Convertible Security is also secured by
a security interest over all assets of ECRC. The Convertible Security contains financial and non-financial covenants customary
for a facility of this size and nature, and includes a financial covenant defining an event of default as all present and future
liabilities of the Company or any of its subsidiaries, exclusive of related party loans, for an amount or amounts exceeding C$2.0
million, and which have not been satisfied on time or within 90 days of invoice, or have become prematurely payable as a result
of its default or breach. This covenant became effective after February 1, 2016, and the Company remains in compliance through
to the date hereof.
Total indebtedness
under the Convertible Security as of March 31, 2017, was $4.9 million.
On June 17, 2016,
we completed a warrant exercise program resulting in gross proceeds of C$4.8 million. A total of approximately 7.4 million C$0.65
share purchase warrants expiring November 10, 2016 were exercised during the incentive period, representing about 50% of all C$0.65
warrants outstanding and nearly 70% of warrant holders eligible to participate. Each holder who exercised one warrant during the
program received 1.11029 Common Shares, representing one warrant share and 0.11029 of a Common Share, as the incentive portion.
A total of 8,210,394 common shares were issued under the program, which was previously approved by our shareholders on May 17,
2016.
On October 7, 2016,
the Company issued 531,908 Common Shares to Lind upon conversion of $275,000 in principal amount of the Company’s outstanding
convertible note issued in December of 2015 at a conversion price of C$0.6834 per share.
On November 9, 2016,
the Company issued 606,359 Common Shares to Lind upon conversion of $275,000 in principal amount of the Company’s outstanding
convertible note issued in December of 2015 at a conversion price of C$0.60792 per share.
On December 14, 2016,
the Company issued 544,735 Common Shares to Lind upon conversion of $275,000 in principal amount of the Company’s outstanding
convertible note issued in December of 2015 at a conversion price of C$0.67065 per share.
In October of 2016,
the Company issued 1,220,841 Common Shares to private investors upon the exercise of the Company’s outstanding Common Share
purchase warrants. The Company received aggregate proceeds from the exercise of the warrants of C$793,547. The warrants were exercised
at a price of C$0.65 per share.
From November 1 through
November 12, 2016, the Company issued 2,096,067 Common Shares to private investors upon the exercise of the Company’s outstanding
Common Share purchase warrants. The Company received aggregate proceeds from the exercise of the warrants of C$1,362,444. The warrants
were exercised at a price of C$0.65 per share.
On January 16, 2017,
we entered into the Smith Credit Agreement in the amount of $2.0 million with Mark Smith. The Smith Credit Agreement bears an interest
rate of 10% and is drawdowns are subject to a 2.5% establishment fee. Amounts outstanding under the Smith Credit Agreement will
become due January 16, 2018, and are secured by all of the Company’s assets pursuant to a general security agreement between
the Company and Mr. Smith dated June 17, 2015. The Smith Credit Agreement contains financial and non-financial covenants customary
for a facility of this size and nature. On January 18, 2017, we completed a drawdown from the Smith Credit Agreement in the amount
of $175.
On February 1, 2017,
the Company issued 617,971 Common Shares to Lind upon conversion of $275,000 in principal amount of the Company’s outstanding
convertible note issued in December of 2015 at a conversion price of C$0.58064 per share.
On February 6, 2017,
the Company issued 1,698,072 Common Shares to Lind upon conversion of $750,000 in principal amount of the Company’s outstanding
convertible note issued in December of 2015 at a conversion price of C$0.57792 per share.
On February 14, 2017,
the Company issued a notice to Lind Asset Management IV, LLC regarding the first tranche increase. The additional $1.2 million
in face amount of the Initial Convertible Security is convertible into common shares of the Company pursuant to its terms.
On February 14, 2017,
we completed the First Tranche Closing of our February 2017 Offering. The First Tranche Closing consisted of the issuance of 3,860,800
February 14, 2017 Units at a price of C$0.70 per February 14, 2017 Unit, for gross proceeds of C$2.7 million. Each February 14,
2017 Unit consists of one Common Share and one transferable February 14, 2017 Warrant, with each February 14, 2017 Warrant entitling
the holder thereof to acquire one additional Common Share at a price of C$0.85 until February 14, 2020.
On February 28, 2017,
we completed the second and final tranche closing (the “Final Closing”) of our non-brokered private placement of units
announced January 27, 2017, January 30, 2017, and February 10, 2017 (the “February 2017 Offering”). The Final Closing
consisted of the issuance of 3,503,989 units consisting of 2,964,682 units dated February 21, 2017 (each a “February 21,
2017 Unit”) and 539,307 units dated February 28, 2017 (each a “February 28, 2017 Unit”) at a price of C$0.70
per each February 21, 2017 and February 28, 2017 Unit, for gross aggregate proceeds of C$2.5 million. Each February 21, 2017 Unit
consists of one Common Share and one transferable Common Share purchase warrant (each whole such warrant a “February 22,
2017 Warrant”), with each February 21, 2017 Warrant entitling the holder thereof to acquire one additional Common Share at
a price of C$0.85 until February 21, 2020. Each February 28, 2017 Unit consists of one Common Share and one transferable Common
Share purchase warrant (each whole such warrant a “February 28, 2017 Warrant”), with each February 28, 2017 Warrant
entitling the holder thereof to acquire one additional Common Share at a price of C$0.85 until February 28, 2020. The Company paid
cash commissions of C$87,527 and issued 78,342 broker warrants (having the same terms as the Warrants) in connection with the Private
Placement to brokers outside of the United States.
On March 24, 2017,
we announced that we had entered into an amending agreement dated March 20, 2017, with Lind to extend the term of the Initial Convertible
Security by six months to June 17, 2018, and entered into amending agreements dated March 20, 2017, with Mark Smith to extend the
due dates of the Smith Credit Agreement and Original Smith Loan to June 16, 2018 and June 17, 2018, respectively.
On March 31, 2017,
we received $1.0 million in First Tranche Increase funding from Lind. In connection with this additional funding, the Company issued
890,670 Lind first Tranche Increase Warrants, at an exercise price of C$0.90 per warrant.
On April 24, 2017,
the Company issued 901,060 Common Shares to Lind upon conversion of $400,000 in principal amount of the Company’s outstanding
convertible note issued in December of 2015 at a conversion price of C$0.59934 per share.
On May 16,
2017, we entered into an underwriting agreement (the “Underwriting Agreement”), subject to regulatory approval,
with Mackie Research Capital Corporation (“Mackie”), pursuant to which Mackie has agreed to purchase, on a bought
deal short form prospectus basis, 3,077,000 units of the Company (the “Units”) at a price of C$0.65 per Unit
(the “Private Placement”), subject to an option to increase the size of the Private Placement by up to 15% in
Units (the “Overallotment Option”). Each Unit will consist of one Common Share and one transferable Common
Share purchase warrant (collectively, the “Selling Shareholder Warrants”), with each Selling Shareholder
Warrant entitling the holder to acquire one Common Share at a price of C$0.85 at any time prior to the date which is 36
months following the closing date of the Private Placement (the “Closing Date”). This prospectus assumes
that Mackie will exercise the Overallotment Option on the Closing Date. As a result, we expect to issue an aggregate of
3,538,550 Units on the Closing Date in connection with the Private Placement. In connection with the closing of the Private
Placement and assuming the exercise of the Overallotment Option in full on the Closing Date, Mackie will also receive
230,005 non-transferable Common Share purchase warrants (collectively, the “Compensation Warrants”), with each
Compensation Warrant entitling the holder to acquire one Common Share at a price of C$0.65 at any time prior to the date
which is 36 months from the Closing Date.
On June 1, 2017, the Company issued 1,489,142 Common Shares
to Lind upon conversion of $600,000 in principal amount of the Company’s outstanding convertible note issued in December
of 2015 at a conversion price of C$0.54485 per share.
Liquidity and Capital Resources
We have no revenue
generating operations from which we can internally generate funds. To date, our ongoing operations have been financed by the sale
of our equity securities by way of private placements, convertible securities issuances, and the exercise of incentive stock options
and share purchase warrants. We believe that we will be able to secure additional private placements financings in the future,
although we cannot predict the size or pricing of any such financings. In addition, we can raise funds through the sale of interests
in our mineral properties, although current market conditions have substantially reduced the number of potential buyers/acquirers
of any such interest(s). This situation is unlikely to change until such time as we can complete work on the Feasibility Study.
As of April 30, 2017, the Company had cash of
approximately $1.4 million and a working capital deficiency of approximately $0.6 million, compared to cash of $1.9 million
and working capital of $0.3 million on March 31, 2016, and compared to cash of $4.4 million and working capital of $2.3
million on June 30, 2016. This change in working capital is the result of our continued work towards completion of the
Feasibility Study, and the timing of financing inflows.
We expect that the Company will operate at a loss for the foreseeable
future. As of April 30, 2017, the Company’s planned operational needs for the entire fourth quarter of fiscal 2017 are approximately
$2.3 million until June 30, 2017. For the quarter, our ongoing burn rate averages to approximately $765,000 per month, where approximately
$320,000 is for administrative purposes, $130,000 for project advancement, and approximately $300,000 is for planned exploration
expenditures related to the completion of the Feasibility Study, permitting efforts, and third party consultants until June 30,
2017. Upon the completion of the Feasibility Study, the Company’s monthly burn rate is expected to drop considerably to approximately
$180,000 to $210,000 per month for general overhead expenses as the Company will be no longer engaging the consulting services
utilized for the development of the Feasibility Study. The Company’s ability to continue operations and fund our current
work plan is dependent on Management’s ability to secure additional financing.
As of March 31,
2017, exploration expenditure commitments (for example, lease payments) are $32,000 until June 30, 2017 and planned
exploration and development activities are approximately $1.0 million until June 30, 2017. To maintain its currently held
properties and fund its currently anticipated general and administrative costs and planned exploration and development
activities at the Elk Creek Project for the fiscal year ending June 30, 2017, the Company may require additional financing
during 2017. Should such financing not be available in that time-frame, we will be required to reduce our activities and will
not be able to carry out all our presently planned exploration and development activities at the Elk Creek Project.
The Company expects that the net proceeds from the Private Placement
will provide sufficient capital for the next one to two months following the release of the results of the Feasibility Study. However,
the settlement of the Private Placement, and our receipt of the net proceeds therefrom, will not occur until the registration statement
to which this prospectus relates is declared effective by the SEC. Any delay in the settlement of the Private Placement, or the
Company's inability to settle the Private Placement, could have a material adverse effect on the Company's financial condition,
results of operations, or prospects.
We currently have
no further funding commitments or arrangements for additional financing at this time (other than the potential exercise of options
and warrants) and there is no assurance that we will be able to obtain additional financing on acceptable terms, if at all. There
is significant uncertainty that we will be able to secure any additional financing in the current equity markets. The quantity
of funds to be raised and the terms of any proposed equity financing that may be undertaken will be negotiated by Management as
opportunities to raise funds arise. Specific plans related to the use of proceeds will be devised once financing has been completed
and Management knows what funds will be available for these purposes. Management intends to pursue funding sources of both debt
and equity financing, including but not limited to the issuance of equity securities in the form of Common Shares, warrants, subscription
receipts, or any combination thereof in units of the Company pursuant to private placements to accredited investors or pursuant
to equity lines of credit or public offerings in the form of underwritten/brokered offerings, at-the-market offerings, registered
direct offerings, or other forms of equity financing and public or private issuances of debt securities including secured and unsecured
convertible debt instruments or secured debt project financing. Management does not currently know the terms pursuant to which
such financings may be completed in the future, but any such financings will be negotiated at arms-length. Future financings involving
the issuance of equity securities or derivatives thereof will likely be completed at a discount to the then-current market price
of the Company’s securities and will likely be dilutive to current shareholders.
The audit opinion
and notes that accompany our financial statements for the year ended June 30, 2016 disclose a “going concern” qualification
to our ability to continue in business. The accompanying financial statements have been prepared under the assumption that we will
continue as a going concern. We are an exploration stage company and we have incurred losses since our inception. We do not have
sufficient cash to fund normal operations and meet debt obligations for the next 12 months without deferring payment on certain
current liabilities and raising additional funds. We believe that the going concern condition cannot be removed with confidence
until the Company has entered into a business climate where funding of its planned ongoing operating activities is secured.
We have no exposure
to any asset-backed commercial paper. Other than cash held by our subsidiaries for their immediate operating needs in Colorado
and Nebraska, all of our cash reserves are on deposit with major United States and Canadian chartered banks. We do not believe
that the credit, liquidity, or market risks with respect thereto have increased as a result of the current market conditions. However,
in order to achieve greater security for the preservation of its capital, we have, of necessity, been required to accept lower
rates of interest, which has also lowered our potential interest income.
Operating Activities
During the nine months
ended March 31, 2017, the Company’s operating activities consumed $9.0 million of cash (2016: $9.1 million). The cash used
in operating activities for 2017 reflects the Company’s funding of losses of $10.9 million offset by minor non-cash adjustments
and changes in working capital items. Overall, 2017 operational outflows remained steady with 2016. Going forward, the Company’s
working capital requirements are expected to increase substantially in connection the development of the Elk Creek Project.
Cash Flow Considerations
As of April 30, 2017, the Company had cash of approximately $1.4 million and a working
capital deficiency of approximately $0.6 million, compared to cash of $1.9 million and working capital of $0.3 million on March
31, 2016, and compared to cash of $4.4 million and working capital of $2.3 million on June 30, 2016. This change in working capital
is the result of our continued work towards completion of the Feasibility Study, and the timing of financing inflows.
The Company has historically
relied upon equity financings, and to a lesser degree, debt financings, to satisfy its capital requirements and will continue to
depend heavily upon equity capital to finance its activities. The Company may pursue debt financing in the medium term if it is
able to procure such financing on terms more favorable than available equity financing; however, there can be no assurance the
Company will be able to obtain any required financing in the future on acceptable terms.
The Company has limited
financial resources compared to its proposed expenditures, no source of operating income, and no assurance that additional funding
will be available to it for current or future projects, although the Company has been successful in the past in financing its activities
through the sale of equity securities.
The ability of the
Company to arrange additional financing in the future will depend, in part, on the prevailing capital market conditions and its
success in developing the Elk Creek Project. Any quoted market for the Company’s shares may be subject to market trends generally,
notwithstanding any potential success of the Company in creating revenue, cash flows, or earnings, and any depression of the trading
price of the Company’s Common Shares could impact its ability to obtain equity financing on acceptable terms.
Historically, the
Company has used net proceeds from issuances of Common Shares to provide sufficient funds to meet its near-term exploration and
development plans and other contractual obligations when due. However, further development and construction of the Elk Creek Project
will require substantial additional capital resources. This includes near-term funding and, ultimately, funding for Elk Creek Project
construction and other costs. See “Financing” above for greater detail on the Company’s recent equity financings
and discussion of arrangements related to possible future debt financing(s).
Financial and Other Instruments
The Company’s
financial instruments consist of cash, receivables, marketable securities, accounts payable and accrued liabilities, related party
loan, convertible debt, and the derivative liability. The carrying value of receivables, accounts payable and accrued liabilities,
and related party loan approximates their fair values due to their immediate or short-term maturity. Cash and marketable securities
are carried at fair value using a level 1 fair value measurement. Convertible debt and derivative liability are carried at fair
value using level three measurements. The Company’s exposure to changes in market interest rates, relates primarily to the
Company’s earned interest income on cash deposits and short term investments. The Company maintains a balance between the
liquidity of cash assets and the interest rate return thereon. The carrying amount of financial assets, net of any provisions for
losses, represents the Company’s maximum exposure to credit risk.
Contractual Obligations
The Company currently
has an offtake agreement dated November 10, 2014 (the “Offtake Agreement”) with ThyssenKrupp Metallurgical Products
GmbH (“ThyssenKrupp”) whereby ThyssenKrupp will purchase, at market rates, approximately 3,750 metric tons, or fifty
percent (50%), of the Company’s current planned ferroniobium production from the Elk Creek Project for an initial ten-year
term, with an option to extend beyond that timeframe. The Offtake Agreement presupposes the Company obtaining project financing,
obtaining all necessary approvals and constructing a mine at the Elk Creek Project. ThyssenKrupp is based in Essen, Germany, and
is part of the Business Area Materials Services, a global materials distributor and service provider with 500 branches in 44 countries.
The Company appointed ThyssenKrupp as its exclusive sales agent of its production in Europe, with a stated amount to be sold in
Germany. Pursuant to the Offtake Agreement, the Company granted ThyssenKrupp a non-transferable warrant to acquire 8,569,000 Common
Shares of the Company at an exercise price of C$0.67 per Common Share, which expired on December 12, 2015.
On June 15, 2016,
we announced that we had entered into the CMC Agreement with CMC, under which CMC expects to purchase up to a maximum of 1,875
tonnes per year, or roughly twenty-five (25%), of our potential annual Ferroniobium production from our Elk Creek, Nebraska resource.
Under the CMC Agreement, CMC will purchase this amount of Ferroniobium under a market-based pricing structure for an initial 10-year
term, with an option to extend beyond that period upon mutual agreement of the parties.
Tabular Disclosure of Contractual Obligations
Information regarding
our known contractual obligations of the types described below as of June 30, 2016, is set forth in the following table ($000):
|
|
|
|
Payments due by period
|
|
|
Total
|
|
Less than
1 year
|
|
1 – 3
years
|
|
4 – 5
years
|
|
After
5 years
|
|
|
|
|
|
|
|
|
|
|
|
Debt
|
|
$
|
7,510
|
|
|
$
|
1,214
|
|
|
$
|
6,296
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating leases
|
|
|
349
|
|
|
|
207
|
|
|
|
123
|
|
|
|
19
|
|
|
|
—
|
|
Total contractual obligations
|
|
$
|
7,859
|
|
|
$
|
1,421
|
|
|
$
|
6,419
|
|
|
$
|
19
|
|
|
$
|
—
|
|
During the nine-month
period ended March 31, 2017, debt obligations decreased $0.5 million due to conversions under the Lind Agreement, partially offset
by funds received from the Lind First Tranche Increase and the Smith Credit Facility. There were no other substantial changes to
contractual obligations.
Off Balance Sheet Arrangements
The Company had no
off balance sheet arrangements for the fiscal years ended June 30, 2016 and 2015, or the nine month period ended March 31, 2017.
Critical Accounting Policies
In applying the Company’s
accounting policies, management undertakes a number of judgments, estimates and assumptions about recognition and measurement of
assets, liabilities, income and expenses. Actual results may differ from the judgments, estimates and assumptions made by management
and will seldom equal the estimated results.
The most significant
critical judgment that members of management have made in the process of applying the entity’s accounting policies and that
have the most significant effect on the amounts recognized in the consolidated financial statements is the policy on exploration
and evaluation assets.
In particular, management
is required to assess mineral interests for impairment. Note 5 to the consolidated financial statements discloses the carrying
values of such assets. As part of this assessment, management must make an assessment as to whether there are indicators of impairment.
If there are indicators, management performs an impairment test on the major assets within this balance.
The recoverability
of exploration and evaluation assets is dependent on a number of factors common to the natural resource sector. These include the
extent to which the Company can continue to renew its exploration and future development licenses with local authorities, establish
economically recoverable reserves on its properties, the ability of the Company to obtain necessary financing to complete the development
of such reserves and future profitable production or proceeds from the disposition thereof. The Company will use the evaluation
work of professional geologists, geophysicists and engineers for estimates in determining whether to commence or continue mining
and processing. These estimates generally rely on scientific and economic assumptions, which in some instances may not be correct,
and could result in the expenditure of substantial amounts of money on a deposit before it can be determined whether or not the
deposit contains economically recoverable mineralization. If a determination is made that a deposit does not contain economically
recoverable mineralization, or if other factors are present that indicate the existence of an impairment, a property is written
down to net realizable value, which could have a material effect on the financial position and financial performance of the Company.
Share-based compensation
is determined using the Black-Scholes pricing model based on estimated fair values of all share-based awards at the date of grant
and is expensed to the consolidated statement of loss over each award’s vesting period. The Black-Scholes pricing model utilizes
subjective assumptions such as expected price volatility and expected life of the option. Changes in these input assumptions can
significantly affect the fair value estimate, which could impact amounts recognized as expense and carried as a component of shareholders’
equity. See Note 8b in the Company’s consolidated financial statements for the year ended June 30, 2016 for a summary of
the assumptions used to calculate the value of share-based compensation.
CERTAIN
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a
general summary of certain U.S. federal income tax considerations applicable to a U.S. Holder (as defined below) arising from and
relating to the acquisition, ownership, and disposition of the Common Shares and Warrants. This summary is for general information
purposes only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax considerations
that may apply to a U.S. Holder arising from and relating to the acquisition, ownership, and disposition of Common Shares and Warrants.
In addition, this summary does not take into account the individual facts and circumstances of any particular U.S. Holder that
may affect the U.S. federal income tax consequences to such U.S. Holder, including, without limitation, specific tax consequences
to a U.S. Holder under an applicable income tax treaty. Accordingly, this summary is not intended to be, and should not be construed
as, legal or U.S. federal income tax advice with respect to any U.S. Holder. This summary does not address the U.S. federal alternative
minimum, U.S. federal estate and gift, U.S. state and local, and non-U.S. tax consequences to U.S. Holders of the acquisition,
ownership, and disposition of Common Shares or Warrants. In addition, except as specifically set forth below, this summary does
not discuss applicable tax reporting requirements. Each prospective U.S. Holder should consult its own tax advisors regarding the
U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and non-U.S. tax consequences
relating to the acquisition, ownership and disposition of the Common Shares and Warrants.
No legal opinion from
U.S. legal counsel or ruling from the Internal Revenue Service (the “IRS”) has been requested, or will be obtained,
regarding the U.S. federal income tax consequences of the acquisition, ownership, and disposition of the Common Shares and Warrants.
This summary is not binding on the IRS, and the IRS is not precluded from taking a position that is different from, and contrary
to, the positions taken in this summary. In addition, because the authorities on which this summary is based are subject to various
interpretations, the IRS and the U.S. courts could disagree with one or more of the conclusions described in this summary.
Scope of this Summary
Authorities
This summary is based
on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations (whether final, temporary, or proposed),
published rulings of the IRS, published administrative positions of the IRS, the Convention Between Canada and the United States
of America with Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended (the “Canada-U.S. Tax Convention”),
and U.S. court decisions that are applicable, and, in each case, as in effect and available, as of the date of this document. Any
of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change
could be applied retroactively. This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed
legislation.
U.S. Holders
For purposes of this
summary, the term “U.S. Holder” means a beneficial owner of Common Shares or Warrants that is for U.S. federal income
tax purposes:
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an individual who is a citizen or resident of the United States;
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a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) organized under the laws of the
United States, any state thereof or the District of Columbia;
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an estate whose income is subject to U.S. federal income taxation regardless of its source; or
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a trust that (1) is subject to the primary supervision of a court within the U.S. and the control of one or more U.S. persons
for all substantial decisions or (2) has a valid election in effect under applicable Treasury Regulations to be treated as a U.S.
person.
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U.S. Holders Subject to Special U.S. Federal Income Tax Rules
Not Addressed
This summary does
not address the U.S. federal income tax considerations applicable to U.S. Holders that are subject to special provisions under
the Code, including, but not limited to, U.S. Holders that: (a) are tax-exempt organizations, qualified retirement plans, individual
retirement accounts, or other tax-deferred accounts; (b) are financial institutions, underwriters, insurance companies, real estate
investment trusts, or regulated investment companies; (c) are broker-dealers, dealers, or traders in securities or currencies that
elect to apply a mark-to-market accounting method; (d) have a “functional currency” other than the U.S. dollar; (e)
own Common Shares or Warrants as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement
involving more than one position; (f) acquire Common Shares or Warrants in connection with the exercise of employee stock options
or otherwise as compensation for services; (g) hold Common Shares or Warrants other than as a capital asset within the meaning
of Section 1221 of the Code (generally, property held for investment purposes); or (h) own, have owned or will own (directly, indirectly,
or by attribution) 10% or more of the total combined voting power of the outstanding shares of the Company. This summary also does
not address the U.S. federal income tax considerations applicable to U.S. Holders who are: (a) U.S. expatriates or former long-term
residents of the U.S.; (b) persons that have been, are, or will be a resident or deemed to be a resident in Canada for purposes
of the Income Tax Act (Canada) (the “Tax Act”); (c) persons that use or hold, will use or hold, or that are or will
be deemed to use or hold Common Shares or Warrants in connection with carrying on a business in Canada; (d) persons whose Common
Shares or Warrants constitute “taxable Canadian property” under the Tax Act; or (e) persons that have a permanent establishment
in Canada for the purposes of the Canada-U.S. Tax Convention. U.S. Holders that are subject to special provisions under the Code,
including, but not limited to, U.S. Holders described immediately above, should consult their own tax advisors regarding the U.S.
federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and non-U.S. tax consequences relating
to the acquisition, ownership and disposition of Common Shares or Warrants.
If an entity or arrangement
that is classified as a partnership (or other “pass-through” entity) for U.S. federal income tax purposes holds Common
Shares, or Warrants, the U.S. federal income tax consequences to such entity or arrangement and the partners (or other owners or
participants) of such entity or arrangement generally will depend on the activities of the entity or arrangement and the status
of such partners (or owners or participants). This summary does not address the tax consequences to any such partner (or owner
or participants). Partners (or other owners or participants) of entities or arrangements that are classified as partnerships or
as “pass-through” entities for U.S. federal income tax purposes should consult their own tax advisors regarding the
U.S. federal income tax consequences arising from and relating to the acquisition, ownership, and disposition of Common Shares
and Warrants.
General Rules Applicable to the Ownership and Disposition
of Common Shares and Warrants
There is no authority
dealing specifically with the U.S. federal income tax treatment of a financial instrument with the terms of the Common Shares and
Warrants issued as a unit. Because the Common Shares and the Warrants are separate for all legal purposes (including the ability
of holders to sell or dispose of them separately), the Company intends for U.S. federal income tax purposes to treat each U.S.
Holder as acquiring directly the Common Share and the Warrant comprising its unit. It is possible, however, that the IRS could
challenge such treatment. The entirety of the discussion that follows assumes that each of the Common Share and the Warrant will
be treated as a separate instrument for U.S. federal income tax purposes and that their acquisition as a unit by a U.S. Holder
will be treated as a direct acquisition by such holder of the Common Share and the Warrant. Based on such separate treatment, this
section describes the general rules applicable to the ownership and disposition of the Common Shares and the Warrants. It is subject
in its entirety, however, to the special rules described below under the heading “Passive Foreign Investment Company Rules.”
Common Shares
A U.S. Holder that
receives a distribution, including a constructive distribution, with respect to a Common Share will be required to include the
amount of such distribution in gross income as a dividend (without reduction for any Canadian income tax withheld from such distribution)
to the extent of the current and accumulated “earnings and profits” of the Company, as computed for U.S. federal income
tax purposes. A dividend generally will be taxed to a U.S. Holder at ordinary income tax rates. (See, however, the exception discussed
below for individual and other non-corporate U.S. Holders, which may allow such holders preferential rates when the Company has
terminated PFIC status.) To the extent that a distribution exceeds the current and accumulated “earnings and profits”
of the Company, such distribution will be treated, first, as a tax-free return of capital to the extent of a U.S. Holder's tax
basis in the Common Shares and thereafter as gain from the sale or exchange of such Common Shares. (See “Sale or Other Taxable
Disposition of Common Shares” below). However, the Company may not maintain the calculations of its earnings and profits
in accordance with U.S. federal income tax principles, and U.S. Holders may have to assume that any distribution by the Company
with respect to the Common Shares will constitute ordinary dividend income. Dividends received on Common Shares by corporate U.S.
Holders generally will not be eligible for the “dividends received deduction.” Provided that (1) the Company is eligible
for the benefits of the Canada-U.S. Tax Convention or (2) the Common Shares are readily tradable on a United States securities
market (and certain holding period and other conditions are satisfied), dividends paid by the Company to non-corporate U.S. Holders
, including individuals, will be eligible for the preferential tax rates applicable to long-term capital gains for dividends unless
the Company is classified as a PFIC in the tax year of distribution or in the preceding tax year. The dividend rules are complex,
and each U.S. Holder should consult its own tax advisors regarding the application of such rules.
Upon the sale or other
taxable disposition of Common Shares, subject to the PFIC rules below, a U.S. Holder generally will recognize capital gain or loss
in an amount equal to the difference between the U.S. dollar value of cash received plus the fair market value of any property
received and such U.S. Holder's tax basis in such Common Shares sold or otherwise disposed of. A U.S. Holder’s tax basis
in Common Shares generally will be determined by allocating the holder’s U.S. dollar cost for the Units between the Common
Shares and the Warrants based on their relative fair market values upon issuance (with adjustments provided under the PFIC rules
below). The Company has made such an allocation between the Common Shares and Warrants which is set out above, and U.S. Holders
are urged to consider using this allocation for their basis purposes. Subject again to the PFIC rules, gain or loss recognized
on such sale or other disposition generally will be long-term capital gain or loss if, at the time of the sale or other disposition,
the Common Shares have been held for more than one year.
Preferential tax rates
currently apply to long-term capital gain of a U.S. Holder that is an individual, estate, or trust. There are currently no preferential
tax rates for long-term capital gain of a U.S. Holder that is a corporation. Deductions for capital losses are subject to significant
limitations under the Code. If the Company is determined to be a PFIC, any gain realized on the Common Shares could be ordinary
income under the rules discussed below.
Warrants
The Warrants should
be treated as options for U.S. federal income tax purposes. As a result, exercise of Warrants to purchase Common Shares should
not cause a U.S. Holder to recognize income. The U.S. Holder’s basis in the New Shares purchased by exercise of the Warrants
should equal the sum of the basis in the Warrants exercised to purchase the Common Shares and the price paid upon exercise for
the Common Shares. The holding period of the Common Shares should generally commence on the date of such exercise (and will thus
not include any period for which the holder owned Warrants). (If, however, the Company is deemed to be a PFIC, Common Shares acquired
with the Warrants will be treated as owned for PFIC purposes for the entire period of ownership of such Warrants. See “Passive
Foreign Investment Company Rules--QEF Election,” below.)
If Warrants expire
or lapse without exercise, they will be deemed for U.S. tax purposes to be sold or exchanged on the date of expiration. Accordingly,
a capital loss may generally be claimed in the amount of the adjusted tax basis of the expired Warrants. The holder’s initial
basis will be determined by allocating the holder’s U.S. dollar cost for the Units between the Common Shares and the Warrants
based on their relative fair market values upon issuance.
The Company has made such an allocation between the Common Shares
and Warrants which is set out above, and U.S. Holders are urged to consider using this allocation for their basis purposes. The
capital loss will be treated as short-term or long-term depending on the U.S. holder’s holding period for the expired Warrants.
It will be long-term capital loss if, at the time of the expiration, the holding period is more than one year. The deductibility
of capital losses is subject to limitations.
Upon a sale or other
disposition of Warrants, a U.S. Holder generally will recognize gain or loss for U.S. federal income tax purposes equal to the
difference, if any, between the amount realized on the sale or other disposition and the U.S. Holder’s tax basis in the Warrants
(as described in the previous paragraph), each as calculated in U.S. dollars.
Subject to the PFIC rules below, any resulting
gain or loss generally will be capital gain or loss, and will be treated as long-term capital gain or loss if the U.S. holder’s
holding period for the Warrants exceeds one year at the time of disposition. For non-corporate U.S. holders, including individuals,
any long-term capital gain generally will be subject to taxation at preferential rates. The deductibility of capital losses is
subject to limitations. If the Company is determined to be a PFIC, any gain realized on the Warrants could be ordinary income under
the rules discussed below.
Passive Foreign Investment Company Rules
PFIC Status of the Company
If the Company were
to constitute a “passive foreign investment company” under the meaning of Section 1297 of the Code (a “PFIC”,
as defined below) for any taxable year during a U.S. Holder’s holding period, then certain potentially adverse rules may
affect the U.S. federal income tax consequences to a U.S. Holder as a result of the acquisition, ownership and disposition of Common
Shares and Warrants. The Company believes that it was classified as a PFIC during the tax year ended June 30, 2016, and based on
current business plans and financial expectations, the Company expects that it may be a PFIC for the current tax year and in one
or more future tax years. No opinion of legal counsel or ruling from the IRS concerning the status of the Company as a PFIC has
been obtained or is currently planned to be requested. The determination of whether any corporation was, or will be, a PFIC for
a tax year depends, in part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations.
In addition, whether any corporation will be a PFIC for any tax year depends on the assets and income of such corporation over
the course of each such tax year and, as a result, cannot be predicted with certainty as of the date of this document. Accordingly,
there can be no assurance that the IRS will not challenge any determination made by the Company (or any subsidiary of the Company)
concerning its PFIC status in any taxable year. Each U.S. Holder should consult its own tax advisors regarding the PFIC status
of the Company and each subsidiary of the Company.
In any taxable year
in which the Company is classified as a PFIC, a U.S. Holder will be required to file an annual report with the IRS containing such
information as Treasury Regulations and/or other IRS guidance may require. IRS Form 8621 is currently used for such filings. In
addition to penalties, a failure to satisfy such reporting requirements may result in an extension of the time period during which
the IRS can assess a tax. U.S. Holders should consult their own tax advisors regarding the requirements of filing such information
returns under these rules, including the requirement to file an IRS Form 8621 annually.
The Company generally
will be a PFIC for a taxable year if, for such year, (a) 75% or more of the gross income of the Company is passive income (the
“PFIC income test”) or (b) 50% or more of the value of the Company’s assets either produce passive income or
are held for the production of passive income, based on the quarterly average of the fair market value of such assets (the “PFIC
asset test”). “Gross income” generally includes all sales revenues less the cost of goods sold, plus income from
investments and from incidental or outside operations or sources, and “passive income” generally includes, for example,
dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities
transactions.
Active business gains
arising from the sale of commodities generally are excluded from passive income if substantially all (85% or more) of a foreign
corporation’s commodities are stock in trade or inventory, depreciable property used in a trade or business, or supplies
regularly used or consumed in the ordinary course of its trade or business, and certain other requirements are satisfied.
For purposes of the
PFIC income test and PFIC asset test described above, if the Company owns, directly or indirectly, 25% or more of the total value
of the outstanding shares of another corporation, the Company will be treated as if it (a) held a proportionate share of the assets
of such other corporation and (b) received directly a proportionate share of the income of such other corporation. In addition,
for purposes of the PFIC income test and PFIC asset test described above, and assuming certain other requirements are met, “passive
income” does not include certain interest, dividends, rents, or royalties that are received or accrued by the Company from
certain “related persons” (as defined in Section 954(d)(3) of the Code) also organized in Canada, to the extent such
items are properly allocable to the income of such related person that is neither passive income nor income connected with a U.S.
trade or business.
Under certain attribution
rules, if the Company is a PFIC, U.S. Holders will generally be deemed to own their proportionate share of the Company’s
direct or indirect equity interest in any company that is also a PFIC (a ‘‘Subsidiary PFIC’’), and will
generally be subject to U.S. federal income tax on their proportionate share of (a) any “excess distributions,” as
described below, on the stock of a Subsidiary PFIC and (b) a disposition or deemed disposition of the stock of a Subsidiary PFIC
by the Company or another Subsidiary PFIC, both as if such U.S. Holders directly held the shares of such Subsidiary PFIC. In addition,
U.S. Holders may be subject to U.S. federal income tax on any indirect gain realized on the stock of a Subsidiary PFIC on the sale
or disposition of Common Shares or Warrants. Accordingly, U.S. Holders should be aware that they could be subject to tax under
the PFIC rules even if no distributions are received on the Common Shares and no redemptions or other dispositions of Common Shares
or Warrants are made.
Default PFIC Rules Under Section 1291 of the Code
If the Company is
a PFIC for any tax year during which a U.S. Holder owns Common Shares or Warrants, the U.S. federal income tax consequences to
such U.S. Holder of the acquisition, ownership, and disposition of Common Shares will depend on whether and when such U.S. Holder
makes an election to treat the Company and each Subsidiary PFIC, if any, as a “qualified electing fund” or “QEF”
under Section 1295 of the Code (a “QEF Election”) or makes a mark-to-market election under Section 1296 of the Code
(a “Mark-to-Market Election”). A U.S. Holder that does not make either a QEF Election or a Mark-to-Market Election
will be referred to in this summary as a “Non-Electing U.S. Holder.”
A Non-Electing U.S.
Holder will be subject to the rules of Section 1291 of the Code (described below) with respect to (a) any gain recognized on the
sale or other taxable disposition of Common Shares or Warrants and (b) any “excess distribution” received on the Common
Shares. A distribution generally will be an “excess distribution” to the extent that such distribution (together with
all other distributions received in the current tax year) exceeds 125% of the average distributions received during the three preceding
tax years (or during a U.S. Holder’s holding period for the Common Shares, if shorter).
Under Section 1291
of the Code, any gain recognized on the sale or other taxable disposition of Common Shares or Warrants (including an indirect disposition
of the stock of any Subsidiary PFIC), and any “excess distribution” received on Common Shares or deemed received with
respect to the stock of a Subsidiary PFIC, must be ratably allocated to each day in a Non-Electing U.S. Holder’s holding
period for the respective Common Shares or Warrants. The amount of any such gain or excess distribution allocated to the tax year
of disposition or distribution of the excess distribution, or allocated to years before the entity became a PFIC, if any, would
be taxed as ordinary income at the rates applicable for such year (and not eligible for certain preferred rates). The amounts allocated
to any other tax year would be subject to U.S. federal income tax at the highest tax rate applicable to ordinary income in each
such year. In addition, an interest charge would be imposed on the tax liability for each such year, calculated as if such tax
liability had been due in each such year. A Non-Electing U.S. Holder that is not a corporation must treat any such interest paid
as “personal interest,” which is not deductible.
If the Company is
a PFIC for any tax year during which a Non-Electing U.S. Holder holds Common Shares or Warrants, the Company will continue to be
treated as a PFIC with respect to such Non-Electing U.S. Holder, regardless of whether the Company ceases to be a PFIC in one or
more subsequent tax years. A Non-Electing U.S. Holder may terminate this deemed PFIC status by electing to recognize gain (which
will be taxed under the rules of Section 1291 of the Code discussed above), but not loss, as if such Common Shares and Warrants
were sold on the last day of the last tax year for which the Company was a PFIC.
QEF Election
A U.S. Holder that
makes a timely and effective QEF Election for the tax year in which the holding period of its Common Shares begins generally will
not be subject to the rules of Section 1291 of the Code discussed above with respect to such Common Shares (but it will be subject
to these Section 1291 rules with respect to its Warrants, as described below, and possibly to Common Shares obtained by exercise
of Warrants). A U.S. Holder that makes such a QEF Election will be subject to U.S. federal income tax on such U.S. Holder’s
pro rata share (based on its ownership Common Stock, not Warrants) of (a) the net capital gain of the Company, which will be taxed
as long-term capital gain to such U.S. Holder, and (b) the ordinary earnings of the Company, which will be taxed as ordinary income
to such U.S. Holder. Generally, “net capital gain” is the excess of (a) net long-term capital gain over (b) net short-term
capital loss, and “ordinary earnings” are the excess of (a) “earnings and profits” over (b) net capital
gain. A U.S. Holder that makes a QEF Election will be subject to U.S. federal income tax on such amounts for each tax year in which
the Company is a PFIC, regardless of whether such amounts are actually distributed to such U.S. Holder by the Company. However,
for any tax year in which the Company is a PFIC and has no net income or gain, U.S. Holders that have made a QEF Election would
not have any income inclusions as a result of the QEF Election. If a U.S. Holder that made a QEF Election has an income inclusion,
such a U.S. Holder may, subject to certain limitations, elect to defer payment of current U.S. federal income tax on such amounts,
subject to an interest charge. If such U.S. Holder is not a corporation, any such interest paid will be treated as “personal
interest,” which is not deductible.
A U.S. Holder that
makes a timely and effective QEF Election with respect to the Company generally (a) may receive a tax-free distribution from the
Company to the extent that such distribution represents “earnings and profits” of the Company that were previously
included in income by the U.S. Holder because of such QEF Election and (b) will adjust such U.S. Holder’s tax basis in the
Common Shares to reflect the amount included in income or allowed as a tax-free distribution because of such QEF Election. A U.S.
Holder that makes a QEF Election generally will recognize capital gain or loss on the sale or other taxable disposition of Common
Shares.
A U.S. Holder may
make a timely QEF Election by filing the appropriate QEF Election documents (currently IRS Form 8621) at the time such U.S. Holder
files a U.S. federal income tax return for such year. If a U.S. Holder does not make a timely QEF Election for the first year in
the U.S. Holder’s holding period in which the Company is a PFIC, the U.S. Holder may still be able to make an effective QEF
Election in a subsequent year if such U.S. Holder meets certain requirements and makes a “purging” election to recognize
gain (which will be taxed under the rules of Section 1291 of the Code discussed above) as if such Common Shares and Warrants were
sold for their fair market value on the day the QEF Election is effective. If a U.S. Holder makes a QEF Election but does not make
a “purging” election to recognize gain as discussed in the preceding sentence, then such U.S. Holder shall be subject
to the QEF Election rules and shall continue to be subject to tax under the rules of Section 1291 discussed above with respect
to its Common Shares. If a U.S. Holder owns PFIC stock indirectly through another PFIC, separate QEF Elections must be made for
the PFIC in which the U.S. Holder is a direct shareholder and the Subsidiary PFIC for the QEF rules to apply to both PFICs.
The application of
the QEF rules to the Warrants is complex and not entirely clear. The QEF Election cannot be made with respect to the Warrants themselves.
Thus, the ordinary income treatment (and other negative consequences) described above will continue to apply to a sale or disposition
of Warrants, whether or not the U.S. Holder makes the QEF Election. If, however, a U.S. Holder makes the QEF Election with respect
to any Common Shares it owns, that election will apply to any Common Shares that the holder acquires by exercise of Warrants (with
the result that the U.S. Holder must include such Common Shares’ pro rata share of the Company’s ordinary earnings
and net capital gains after the exercise date). However, under Proposed Regulations issued by the U.S. Treasury, the U.S. Holder’s
holding period for the Common Shares received upon exercise will be deemed to include its holding period for the Warrants. If these
regulations are adopted in final form, a U.S. Holder who makes the QEF Election might not be treated as making an effective election
for all of the U.S. Holder’s holding period for such Common Shares received upon exercise, with the result that the above
Section 1291 rules for ordinary income treatment (and other consequences) upon a sale or disposition may continue to apply to such
Common Shares. Thus, the QEF Election may be of no benefit with respect to a sale or disposition of the Warrants and may be of
limited benefit with respect to a sale or disposition of the Common Shares acquired upon exercise. U.S. Holders of Warrants considering
the QEF election are encouraged to consult their U.S. tax advisers with respect to these consequences.
A QEF Election will
apply to the tax year for which such QEF Election is timely made and to all subsequent tax years, unless such QEF Election is invalidated
or terminated or the IRS consents to revocation of such QEF Election. If a U.S. Holder makes a QEF Election and, in a subsequent
tax year, the Company ceases to be a PFIC, the QEF Election will remain in effect (although it will not be applicable) during those
tax years in which the Company is not a PFIC. Accordingly, if the Company becomes a PFIC in another subsequent tax year, the QEF
Election will be effective and the U.S. Holder will be subject to the QEF rules described above during any subsequent tax year
in which the Company qualifies as a PFIC.
The Company: (a) will
make available to U.S. Holders, upon their written request, information as to its status as a PFIC, and (b) for each taxable year
in which the Company is a PFIC, provide to a U.S. Holder, upon written request, such information and documentation that a U.S.
Holder making a QEF Election with respect to the Company is reasonably required to obtain for U.S. federal income tax purposes.
The Company may elect to provide such information on its website. However, U.S. Holders should be aware that the Company cannot
assure that it will provide any such information relating to any Subsidiary PFIC. Because the Company may own shares in one or
more Subsidiary PFICs at any time, U.S. Holders will continue to be subject to the rules discussed above with respect to the taxation
of gains and excess distributions with respect to any Subsidiary PFIC for which the U.S. Holders do not obtain the required information.
Each U.S. Holder should consult its own tax advisors regarding the requirements for, and procedure for making, a QEF Election with
respect to the Company and any Subsidiary PFIC.
A U.S. Holder makes
a QEF Election by attaching a completed IRS Form 8621, including a PFIC Annual Information Statement, to a timely filed United
States federal income tax return. However, if the Company does not provide the required information with regard to the Company
or any of its Subsidiary PFICs, U.S. Holders may not be able to make a QEF Election for such entity and, unless they make the Mark-to-Market
Election discussed in the next section, will continue to be subject to the rules of Section 1291 of the Code discussed above that
apply to Non-Electing U.S. Holders with respect to the taxation of gains and excess distributions.
Mark-to-Market Election
A U.S. Holder may
make a Mark-to-Market Election only if the Common Shares are marketable stock. The Common Shares generally will be “marketable
stock” if the Common Shares are regularly traded on (a) a national securities exchange that is registered with the Securities
and Exchange Commission, (b) the national market system established pursuant to section 11A of the Securities and Exchange Act
of 1934, or (c) a foreign securities exchange that is regulated or supervised by a governmental authority of the country in which
the market is located, provided that (i) such foreign exchange has trading volume, listing, financial disclosure, and surveillance
requirements, and meets other requirements and the laws of the country in which such foreign exchange is located, together with
the rules of such foreign exchange, ensure that such requirements are actually enforced and (ii) the rules of such foreign exchange
effectively promote active trading of listed stocks. If such stock is traded on such a qualified exchange or other market, such
stock generally will be “regularly traded” for any calendar year during which such stock is traded, other than in de
minimis quantities, on at least 15 days during each calendar quarter. The Company expects that the Common Shares will meet the
definition of “marketable stock,” although there can be no assurance of this, especially as regards the required trading
frequency.
If a U.S. Holder that
makes a Mark-to-Market Election for any taxable year with respect to its Common Shares, it generally will not be subject to the
rules of Section 1291 of the Code discussed above with respect to such Common Shares for such taxable year. However, if a U.S.
Holder does not make a Mark-to-Market Election beginning in the first tax year of such U.S. Holder’s holding period for which
the Company is a PFIC and such U.S. Holder has not made a timely QEF Election, the rules of Section 1291 of the Code discussed
above will apply to dispositions of, and certain distributions on, the Common Shares.
The mark-to-market
rules make no provision for warrants or other options. Thus, even if a U.S. Holder makes the Mark-to-Market Election with respect
to its Common Shares for all taxable years, any Warrants held by such U.S. Holder would remain subject to the Section 1291 rules
above. As a result, the Mark-to-Market Election (like the QEF Election) will be of no benefit with respect to a sale or disposition
of the Warrants. Common Shares acquired by exercise of the Warrants could, however, be marked-to-market under the above rules if
the U.S. Holder makes the Mark-to-Market Election (and thus would not be subject to Section 1291 if the Mark-to-Market Election
were made beginning in the taxable year of exercise). U.S. holders of Warrants considering the Mark-to-Market election are encouraged
to consult their U.S. tax advisers with respect to these consequences.
A U.S. Holder that
makes a Mark-to-Market Election will include in ordinary income, for each tax year in which the Company is a PFIC, an amount equal
to the excess, if any, of (a) the fair market value of the Common Shares, as of the close of such tax year over (b) such U.S. Holder’s
adjusted tax basis in such Common Shares. A U.S. Holder that makes a Mark-to-Market Election will be allowed a deduction in an
amount equal to the excess, if any, of (a) such U.S. Holder’s adjusted tax basis in the Common Shares, over (b) the fair
market value of such Common Shares (but only to the extent of the net amount of previously included income as a result of the Mark-to-Market
Election for prior tax years).
A U.S. Holder that
makes a Mark-to-Market Election generally also will adjust its tax basis in the Common Shares to reflect the amount included in
gross income or allowed as a deduction because of such Mark-to-Market Election. Upon a sale or other taxable disposition of Common
Shares, a U.S. Holder that makes a Mark-to-Market Election will recognize ordinary income or ordinary loss. Any such ordinary loss,
however, is limited to exceed the excess, if any, of (a) the amount included in ordinary income because of such Mark-to-Market
Election for prior tax years over (b) the amount allowed as a deduction because of such Mark-to-Market Election for prior tax years.
Losses that exceed this limitation are subject to the rules generally applicable to losses provided in the Code and Treasury Regulations,
with the result that they will be capital losses for most U.S. Holders.
A U.S. Holder makes
a Mark-to-Market Election by attaching a completed IRS Form 8621 to a timely filed United States federal income tax return. A Mark-to-Market
Election applies to the tax year in which such Mark-to-Market Election is made and to each subsequent tax year, unless the Common
Shares cease to be “marketable stock” or the IRS consents to revocation of such election. Each U.S. Holder should consult
its own tax advisors regarding the requirements for, and procedure for making, a Mark-to-Market Election.
Although a U.S. Holder
may be eligible to make a Mark-to-Market Election with respect to the Common Shares, no such election may be made with respect
to the stock of any Subsidiary PFIC that a U.S. Holder is treated as owning, because such stock is not marketable. Hence, the Mark-to-Market
Election will not be effective to avoid the application of the default rules of Section 1291 of the Code described above with respect
to deemed dispositions of Subsidiary PFIC stock or excess distributions from a Subsidiary PFIC to its shareholder.
Other PFIC and Related Rules
Under Section 1291(f)
of the Code, the IRS has issued proposed Treasury Regulations that, subject to certain exceptions, would cause a U.S. Holder that
had not made a timely QEF Election or Mark-to-Market Election to recognize gain (but not loss) upon certain transfers of Common
Shares and Warrants that would otherwise be tax-deferred (e.g., gifts and exchanges pursuant to corporate reorganizations). However,
the specific U.S. federal income tax consequences to a U.S. Holder may vary based on the manner in which Common Shares or Warrants
are transferred.
Certain additional
adverse rules may apply with respect to a U.S. Holder if the Company is a PFIC, regardless of whether such U.S. Holder makes a
QEF Election. For example, under Section 1298(b)(6) of the Code, a U.S. Holder that uses Common Shares as security for a loan will,
except as may be provided in Treasury Regulations, be treated as having made a taxable disposition of such Common Shares.
Special rules also
apply to the amount of foreign tax credit that a U.S. Holder may claim on a distribution from a PFIC. Subject to such special rules,
foreign taxes paid with respect to any distribution in respect of stock in a PFIC are generally eligible for the foreign tax credit.
The rules relating to distributions by a PFIC and their eligibility for the foreign tax credit are complicated, and each U.S. Holder
should consult with its own tax advisors regarding the availability of the foreign tax credit with respect to distributions by
a PFIC.
If U.S. Holders of
Common Shares or U.S. Holders that are treated as constructively owning Common Shares, each owning 10 percent of the Company’s
equity by vote (“10-percent Shareholders”) own in total more than 50 percent of such equity by either vote or value,
the Company will be treated as a controlled foreign corporation (“CFC”). For purposes of this calculation, U.S. Holders
of Warrants will be treated as owning the number of Common Shares for which their Warrants can be exercised. If the Company is
a CFC, a 10-percent Shareholder would be treated, subject to certain exceptions, as receiving a deemed dividend at the end of each
taxable year of the Company in an amount equal to its pro rata share of the Company’s “subpart F income.” Among
other items, and subject to certain exceptions, “subpart F income” includes dividends, interest, certain rents and
royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions. Thus, it is likely
that, if the Company were treated as a CFC, some of its income would be subpart F income. If, for any period, the Company were
treated as a CFC and a U.S. Holder were treated as a 10-percent Shareholder therein, the Company would not be treated as a PFIC
with respect to such U.S. Holder for such period.
The PFIC and CFC rules
are complex, and each U.S. Holder should consult with its own tax advisors regarding the PFIC and CFC rules and how they may affect
the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares and Warrants.
Additional Considerations
Additional Tax on Passive Income
Certain U.S. Holders
that are individuals, estates or trusts (other than trusts that are exempt from tax) will be subject to a 3.8% tax on all or a
portion of their “net investment income,” which includes dividends on the Common Shares and net gains from the disposition
of the Common Shares and Warrants. Further, excess distributions treated as dividends, gains treated as excess distributions under
the PFIC rules discussed above, and mark-to-market inclusions and deductions are all included in the calculation of net investment
income.
Treasury Regulations
provide, subject to the election described in the following paragraph, that solely for purposes of this additional tax, distributions
of previously taxed income will be treated as dividends and included in net investment income subject to the additional 3.8% tax.
Additionally, to determine the amount of any capital gain from the sale or other taxable disposition of Common Shares that will
be subject to the additional tax on net investment income, a U.S. Holder who has made a QEF Election will be required to recalculate
its basis in the Common Shares excluding QEF basis adjustments.
Alternatively, a U.S.
Holder may make an election which will be effective with respect to all interests in a PFIC for which a QEF Election has been made
and which is held in that year or acquired in future years. Under this election, a U.S. Holder pays the additional 3.8% tax on
QEF income inclusions and on gains calculated after giving effect to related tax basis adjustments. U.S. Holders that are individuals,
estates or trusts should consult their own tax advisors regarding the applicability of this tax to any of their income or gains
in respect of the Common Shares or Warrants.
Receipt of Foreign Currency
The amount of any
distribution paid to a U.S. Holder in foreign currency, or on the sale, exchange or other taxable disposition of Common Shares
or Warrants, generally will be equal to the U.S. dollar value of such foreign currency based on the exchange rate applicable on
the date of receipt (regardless of whether such foreign currency is converted into U.S. dollars at that time). A U.S. Holder will
have a basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Any U.S. Holder who converts or otherwise
disposes of the foreign currency after the date of receipt may have a foreign currency exchange gain or loss that would be treated
as ordinary income or loss, and generally will be U.S. source income or loss for foreign tax credit purposes. Different rules apply
to U.S. Holders who use the accrual method of tax accounting. Each U.S. Holder should consult its own U.S. tax advisors regarding
the U.S. federal income tax consequences of receiving, owning, and disposing of foreign currency.
Foreign Tax Credit
Subject to the PFIC
rules discussed above, a U.S. Holder that pays (whether directly or through withholding) Canadian income tax with respect to dividends
paid on the Common Shares generally will be entitled, at the election of such U.S. Holder, to receive either a deduction or a credit
for such Canadian income tax. Generally, a credit will reduce a U.S. Holder’s U.S. federal income tax liability on a dollar-for-dollar
basis, whereas a deduction will reduce a U.S. Holder’s income that is subject to U.S. federal income tax. This election is
made on a year-by-year basis and applies to all foreign taxes paid (whether directly or through withholding) by a U.S. Holder during
a year.
Complex limitations
apply to the foreign tax credit, including the general limitation that the credit cannot exceed the proportionate share of a U.S.
Holder’s U.S. federal income tax liability that such U.S. Holder’s “foreign source” taxable income bears
to such U.S. Holder’s worldwide taxable income. In applying this limitation, a U.S. Holder’s various items of income
and deduction must be classified, under complex rules, as either “foreign source” or “U.S. source.” Generally,
dividends paid on the Common Shares should be treated as foreign source for this purpose, and gains recognized on the sale of Common
Shares or Warrants by a U.S. Holder should be treated as U.S. source for this purpose, except as otherwise provided in an applicable
income tax treaty, and if an election is properly made under the Code. However, the amount of a distribution with respect to the
Common Shares that is treated as a “dividend” may be lower for U.S. federal income tax purposes than it is for Canadian
federal income tax purposes, resulting in a reduced foreign tax credit allowance to a U.S. Holder. In addition, this limitation
is calculated separately with respect to specific categories of income. The foreign tax credit rules are complex, and each U.S.
Holder should consult its own U.S. tax advisors regarding the foreign tax credit rules
.
Backup Withholding and Information Reporting
A U.S. Holder that
is an individual (and, to the extent provided in future regulations, an entity), may be subject to certain reporting obligations
with respect to Common Shares or Warrants if the aggregate value of these and certain other “specified foreign financial
assets” exceeds $50,000. If required, this disclosure is made by filing Form 8938 with the IRS. Significant penalties can
apply if a U.S. Holder is required to make this disclosure and fail to do so. In addition, a U.S. Holder should consider the possible
obligation to file online a FinCEN Form 114—Foreign Bank and Financial Accounts Report, as a result of holding Common Shares
or Warrants in certain accounts. Holders are urged to consult their U.S. tax advisors with respect to these and other reporting
requirements that may apply to their acquisition of Common Shares and Warrants.
Payments made within
the U.S., or by a U.S. payor or U.S. middleman, of dividends on, and proceeds arising from the sale or other taxable disposition
of, Common Shares or Warrants will generally be subject to information reporting and backup withholding tax, at the rate of 28%,
if a U.S. Holder (a) fails to furnish such U.S. Holder’s correct U.S. taxpayer identification number (generally on Form W-9),
(b) furnishes an incorrect U.S. taxpayer identification number, (c) is notified by the IRS that such U.S. Holder has previously
failed to report properly items subject to backup withholding tax, or (d) fails to certify, under penalty of perjury, that such
U.S. Holder has furnished its correct U.S. taxpayer identification number and that the IRS has not notified such U.S. Holder that
it is subject to backup withholding tax. However, certain exempt persons generally are excluded from these information reporting
and backup withholding rules. Backup withholding is not an additional tax. Any amounts withheld under the U.S. backup withholding
tax rules will be allowed as a credit against a U.S. Holder’s U.S. federal income tax liability, if any, or will be refunded,
if such U.S. Holder furnishes required information to the IRS in a timely manner.
The discussion of
reporting requirements set forth above is not intended to constitute a complete description of all reporting requirements that
may apply to a U.S. Holder. A failure to satisfy certain reporting requirements may result in an extension of the time period during
which the IRS can assess a tax and, under certain circumstances, such an extension may apply to assessments of amounts unrelated
to any unsatisfied reporting requirement. Each U.S. Holder should consult its own tax advisors regarding the information reporting
and backup withholding rules.
THE ABOVE SUMMARY IS NOT INTENDED TO
CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS WITH RESPECT TO THE ACQUISITION, OWNERSHIP,
AND DISPOSITION OF COMMON SHARES AND WARRANTS. U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSIDERATIONS
APPLICABLE TO THEM IN THEIR OWN PARTICULAR CIRCUMSTANCES.
Changes
in and Disagreements with
Accountants on Accounting and Financial Disclosure
Effective June 24,
2015, we ended our relationship with Davidson & Company LLP Charted Professional Accountants (“Davidson”) as our
independent registered public accounting firm. Davidson’s dismissal as our independent registered public accounting firm
was approved by the Audit Committee of our Board, as well as our Board.
Davidson’s reports
regarding the Company’s financial statements for the fiscal years ended June 30, 2014 and 2013 did not contain any adverse
opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles, except
that the audit report of Davidson on the Company’s financial statements for fiscal years ended June 30, 2014 and 2013 contained
an explanatory paragraph which noted that there was substantial doubt about the Company’s ability to continue as a going
concern.
During the fiscal
years ended June 30, 2014 and 2013, and during the period from July 1, 2014 to the date of dismissal, (i) there were no disagreements
with Davidson on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures,
which disagreements, if not resolved to the satisfaction of Davidson would have caused it to make reference to such disagreement
in its reports; and (ii) there were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.
The Company has provided
Davidson with a copy of the foregoing disclosures and requested that Davidson furnish the Company with a letter addressed to the
SEC stating whether or not it agrees with the above statements. A copy of such letter has been filed as Exhibit 16.1 to the Registration
Statement on Form S-1 of which this prospectus forms a part.
Effective June 24,
2015, we engaged BDO USA, LLP (“BDO”) as the Company’s independent registered public accounting firm to audit
the Company’s financial statements for the fiscal year ending June 30, 2015.
During each of the
Company’s two most recent fiscal years and through the interim periods preceding the engagement of BDO, we (a) have not engaged
BDO as either the principal accountant to audit the Company’s financial statements, or as an independent accountant to audit
a significant subsidiary of the Company and on whom the principal accountant is expected to express reliance in its report; and
(b) have not consulted with BDO regarding (i) the application of accounting principles to a specific transaction, either completed
or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and no written report
or oral advice was provided to the Company by BDO concluding there was an important factor to be considered by the Company in reaching
a decision as to an accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement,
as that term is defined in Item 304(a)(1)(iv) of Regulation S-K or a reportable event, as that term is described in Item 304(a)(1)(v)
of Regulation S-K.
Quantitative
and Qualitative Disclosures About Market Risk
Interest rate risk
The Company’s
exposure to changes in market interest rates, relates primarily to the Company’s earned interest income on cash deposits
and short term investments. The Company maintains a balance between the liquidity of cash assets and the interest rate return thereon.
The carrying amount of financial assets, net of any provisions for losses, represents the Company’s maximum exposure to credit
risk.
Foreign currency exchange risk
The company incurs
expenditures in both U.S. and Canadian dollars. Canadian dollar expenditures are primarily related to metallurgical-related exploration
expenses, as well as certain common share-related costs and professional services. As a result, currency exchange fluctuations
may impact the costs of our operating activities. To reduce this risk, we maintain sufficient cash balances in Canadian dollars
to fund expected near-term expenditures.
Commodity price risk
The Company is exposed
to commodity price risk related to the elements associated with the Elk Creek Project. A significant decrease in the global demand
for these elements may have a material adverse effect on our business. The Elk Creek Project is not in production, and the Company
does not currently hold any commodity derivative positions.
Directors
and Executive Officers
As of June 1,
2017, the names, titles, and ages of the members of the Company’s Board of Directors and its executive officers are as
set forth in the below table.
Name
|
|
Age
|
|
Position
|
|
Date of Appointment
|
Mark A. Smith
|
|
58
|
|
CEO, President, Executive Chairman and Director
|
|
CEO and Director: Sept. 23, 2013
President and Executive Chairman: May 31, 2015
|
Neal Shah
|
|
43
|
|
CFO
|
|
July 1, 2016; Interim CFO on March 31, 2015
|
Scott Honan
|
|
46
|
|
Vice President, Business Development
|
|
May 6, 2014
|
John Ashburn, Jr.
|
|
62
|
|
Vice-President, General Counsel and Corporate Secretary
|
|
April 2, 2015
|
Jim Sims
|
|
56
|
|
VP of External Affairs
|
|
November 2, 2015
|
Joseph A. Carrabba
|
|
64
|
|
Lead Director
|
|
December 15, 2014
|
Michael Morris
|
|
71
|
|
Director
|
|
July 28, 2014
|
David C. Beling
|
|
75
|
|
Director
|
|
June 6, 2011
|
Anna Castner Wightman
|
|
49
|
|
Director
|
|
February 23, 2016
|
The following sets
forth a brief description of the business experience of each director and executive officer of the Company:
Mark Smith – Director, President and Chief Executive
Officer
Mr. Smith has
36 years of experience in operating, developing, and financing mining and strategic materials projects in the Americas and abroad.
In September 2013, he was appointed CEO and a Director of NioCorp. Mr. Smith also serves as the President and Chief Executive
Officer for Largo Resources Ltd., a mineral company with an operating property in Brazil and projects in Brazil & Canada. From
October 2008 through December 2012, Mr. Smith served as Chief Executive Officer and Director of Molycorp Inc., where he was
instrumentally involved in taking it from a private company to a publicly traded company with a producing mine. From November 2011
through May 2015, he served on the Board of Directors at Avanti Mining (TSXv: AVT, Avanti Mining changed its name to AlloyCorp
in early 2015). From December 2012 through September 2013, he served as the Managing Director of KMSmith LLC where he served as
a consultant.
Prior to Molycorp,
he held numerous engineering, environmental, and legal positions within Unocal Corporation (“Unocal”) and later served
as the President and Chief Executive Officer of Chevron Mining Inc. (“Chevron”), a wholly-owned subsidiary of Chevron
Corporation. Mr. Smith also served for over seven years as the shareholder representative of CBMM, a private company that
currently produces approximately 85% of the world supply of niobium. During his tenure with Chevron, Mr. Smith was responsible
for Chevron’s three coal mines, one molybdenum mine, a petroleum coke calcining operation and the Mountain Pass mine. At
Unocal, he served as the Vice-President from June 2000 to April 2006, and managed the real estate, remediation, mining and carbon
divisions. Mr. Smith is a Registered Professional Engineer and serves as an active member of the State Bars of California
and Colorado. He received his Bachelor of Science degree in Agricultural Engineering from Colorado State University in 1981 and
his Juris Doctor, cum laude, from Western State University, College of Law, in 1990.
Mr. Smith’s
extensive leadership, management, strategic planning, and strategic materials industry expertise through his various leadership
and directorship roles in public companies large and small makes him well-qualified to serve as a member of the board of directors
of NioCorp.
Neal Shah – Chief Financial Officer
Mr. Shah joined
NioCorp in September 2014 as Vice President of Finance, and now serves as the Company’s CFO. Mr. Shah served as Finance
Manager at Covidien Ltd., based out of the company’s Boulder, CO office from May 2014 through September 2014. From April
2011 until May 2014, he held the positions of Senior Manager of Corporate Development and M&A and more recently the Director
of Strategy and Business Planning at Molycorp Inc.’s corporate offices in Greenwood Village, CO. Mr. Shah graduated
from the University of Colorado with a BSc in Mechanical Engineering in 1996, and from Purdue University with an MBA in 2002. Since
the completion of his MBA, Mr. Shah also held key finance roles with Intel Corporation and IBM.
Scott Honan – Vice President, Business Development
Mr. Honan joined
NioCorp in May 2014 and now serves as Vice President, Business Development. He also serves as President of Elk Creek Resources
Corporation, the NioCorp subsidiary that is developing the Elk Creek Project in Nebraska. Prior to his work at NioCorp, Mr. Honan
served in several leadership capacities at Molycorp, Inc. from February 2001 - May 2014, including as Vice President Health, Environment,
Safety and Sustainability and General Manager and Environmental Manager. With over 23 years of experience in the gold and rare
earth industries, Mr. Honan is a graduate of Queen’s University in Mining Engineering in both Mineral Processing (B.Sc.
Honors) and Environmental Management (M.Sc.) disciplines.
Jim Sims – Vice President, External Affairs
Mr. Sims has
more than 25 years of experience in devising and executing marketing, media relations, public affairs, and investor relations operations
for companies in the mining, chemical, manufacturing, utility, and renewable energy sectors. He joined NioCorp in November 2015,
after serving for more than five years as Director (and then Vice President) of Corporate Communications for Molycorp Inc. from
March 2010 through November 2015. Mr. Sims also serves as Director of Investor and Public Relations for IBC Advanced Alloys Corporation.
Mr. Sims was President and CEO of Policy Communications, Inc. from 1998 – 2010, and served as White House Director of Communications
for the Energy Policy Development Group. A former U.S. Senate Chief of Staff, he is the co-founder and former Executive Director
of the Geothermal Energy Association, and he has served as Board Chairman of the Rare Earth Technology Alliance. He is an honors
graduate of Georgetown University.
John Ashburn – Vice President, General Counsel and
Corporate Secretary
An attorney with 35
years of experience, including 25 years in extractive industries, Mr. Ashburn joined NioCorp in January 2015 and was appointed
to Vice President, General Counsel and Corporate Secretary on April 2, 2015. He served as Vice President, Chief Legal Officer and
a member of the Board of Directors of Simbol, Inc., a privately held development stage Lithium production company, from May 2013
– January 2015, and was Executive Vice President and General Counsel of Molycorp, Inc. from December 2008 – April 2013.
Prior to that, he held senior legal positions with Chevron and Unocal. Mr. Ashburn holds a Juris Doctorate from Northern Illinois
University, School of Law.
Joseph Carrabba – Lead Director
Mr. Carrabba
served as the Chairman, President and Chief Executive Officer of Cliffs Natural Resources Inc., a publicly-held international mining
and natural resources company, from September 2006 until his retirement in November 2013. From 2013 until the present day, he has
served as CEO of Irati Energy, a private mining company in Brazil, and as a corporate director and consultant. Prior to joining
Cliffs Natural Resources Inc., Mr. Carrabba gained broad experience in the mining industry throughout Canada, the United States,
Asia, Australia and Europe. He was the former General Manager of Weipa Bauxite Operation of Comalco Aluminum and served in a variety
of leadership capacities at Rio Tinto, a global mining company, including as President and Chief Operating Officer of Rio Tinto’s
Diavik Diamond Mines, Inc. Mr. Carrabba is also a director of Newmont Mining Corporation, TimkenSteel Corporation, Key Bank
and the Aecon Group. He holds a bachelor’s degree in geology from Capital University and his MBA from Frostburg State University
in Maryland.
Mr. Carrabba’s
qualification to serve on our Board is based upon his many years of leadership and executive experience in large publicly traded
companies in the mining and materials processing industries.
Michael Morris – Director
Mr. Morris was
formerly the Chairman of the Board of Heritage Oaks Bankcorp. When Heritage Oaks Bank merged with Pacific Premier Bancorp on April
1, 2017, Mr. Morris became a member of the Pacific Premier Bancorp Board of Directors. He joined Heritage Oaks’ Board
in January 2001 and assumed the Board chairmanship in 2007. In addition, Mr. Morris has worked since 1972 at Andre, Morris
& Buttery, a professional law corporation, where he now serves as Senior Principal and Chairman of the Board. From 2000 to
late 2006, Mr. Morris served on the board of Molycorp, which at the time was a wholly owned subsidiary of Unocal and then
Chevron. Mr. Morris was the only independent director of Molycorp at that time. Mr. Morris is a graduate of Georgetown
University and received his law degree from the University of San Francisco School of Law. He has practiced business and environmental
law for over 40 years. Mr. Morris served as a member of the Board of Governors and Vice President of the State Bar of California.
He served as a 1st Lieutenant in the U.S. Army from 1970 to 1972.
Mr. Morris’
qualification to serve on our Board is based on his years of senior executive leadership with publicly traded companies and his
long experience in the financial, banking, legal, and manufacturing fields.
David Beling – Director
Mr. Beling is
a Registered Professional Mining Engineer with 52 years of experience and has been on the board of directors of 14 mining companies
starting in 1981. He is President, CEO, CFO and director of Bullfrog Gold Corp. since July 2011 and was the Executive Vice President
and Chief Operating Officer of Geovic Mining Corp. from 2004 to 2010. Mr. Beling has examined, significantly reviewed or been
directly involved with 88 underground mines, 131 open pit mines and 164 process plants in the global metal, energy and industrial
mineral sectors. Employment included 14 years with five majors, then 38 years of employment and consulting for 25 junior mining
companies.
Mr. Beling’s
qualification to serve on our Board is based upon his decades of senior leadership and executive positions with companies in the
mining and minerals processing sectors.
Anna Castner Wightman – Director
A sixth generation
Nebraskan and a graduate of Nebraska Wesleyan University, Ms. Wightman serves as Vice President of Government Relations for
First National Bank of Omaha, Nebraska, a position she has held since 2000. Prior to that, she worked for the Greater Omaha Chamber
of Commerce and served in the U.S. Congress for former Congressman Bill Barrett and former Congresswoman Virginia Smith, both of
whom represented the 3rd Congressional District of Nebraska. Ms. Wightman serves on the Boards of Directors of the Nebraska Chamber
of Commerce, Rose Theater for Performing Arts, and Joslyn Castle.
Ms. Wightman’s
qualification to serve on our Board is based on her extensive executive experience in the banking and financial services sectors,
and her deep knowledge of the Nebraska business and public policy landscapes.
Significant Employees
There are no other
significant employees than those already discussed herein.
Family Relationships
There are no family
relationships among the directors or executive officers of the Company.
Involvement in Certain Legal Proceedings
During the past ten
years none of the persons serving as executive officers and/or directors of the Company and, with respect to promoter or control
persons, for the past five years, none have been the subject matter of any of the following legal proceedings that are required
to be disclosed pursuant to Item 401(f) of Regulation S-K including: (a) any bankruptcy petition filed by or against any business
of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior
to that time; (b) any criminal convictions; (c) any order, judgment, or decree permanently or temporarily enjoining, barring, suspending
or otherwise limiting his or her involvement in any type of business, securities or banking activities; (d) any finding by a court,
the SEC or the CFTC to have violated a federal or state securities or commodities law, any law or regulation respecting financial
institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud; or (e) any sanction or order of any
self-regulatory organization or registered entity or equivalent exchange, association or entity. Further, no such legal proceedings
are believed to be contemplated by governmental authorities against any director or executive officer.
Executive
Compensation
The following table
sets out the compensation received for the fiscal years June 30, 2015 and June 30, 2016 in respect to each of the individuals who
served as the Company’s chief executive officer at any time during the last fiscal year, as well as the Company’s most
highly compensated executive officers:
Summary Compensation Table
Name and Principal Position (a)
|
|
Fiscal Year
(b)
|
|
Salary ($)
(c)
|
|
Option
Awards
(1)
($)
(f)
|
|
Total ($)
(j)
|
Mark A Smith, CEO, President
|
|
2016
|
(2)
|
|
$
|
270,000
|
|
|
$
|
157,972
|
|
|
$
|
427,972
|
|
|
|
2015
|
(2)
|
|
$
|
270,000
|
|
|
$
|
287,230
|
|
|
$
|
557,230
|
|
Scott Honan, Vice President Business Development
|
|
2016
|
|
|
$
|
212,500
|
|
|
$
|
105,315
|
|
|
$
|
317,815
|
|
|
|
2015
|
|
|
$
|
200,000
|
|
|
$
|
162,940
|
|
|
$
|
362,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Ashburn, Jr., Vice-President, General Counsel and Corporate Secretary
|
|
2016
|
|
|
$
|
200,000
|
|
|
$
|
73,720
|
|
|
$
|
273,720
|
|
|
|
2015
|
|
|
$
|
100,000
|
|
|
$
|
192,840
|
|
|
$
|
292,840
|
|
|
(1)
|
The value of the option-based awards was determined using the Black-Scholes option-pricing model,
with the following assumptions:
|
|
|
2016
|
|
2015
|
Risk-free interest rate
|
|
|
0.75
|
%
|
|
|
1.25
|
%
|
Expected dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
Expected stock price volatility
|
|
|
98.2
|
%
|
|
|
105.7
|
%
|
Expected life of options
|
|
|
2.15 years
|
|
|
|
2.15 years
|
|
Option pricing models require
the input of highly subjective assumptions, particularly as to the expected volatility of the stock. Changes in these assumptions
can materially affect the fair value estimate, and therefore it is management’s view that the existing models may not provide
a single reliable measure of the fair value of the Company’s stock option grants. The Company uses an option-pricing model
because there is no market for which employee options may be freely traded. Readers are cautioned not to assume that the value
derived from the model is the value that an employee might receive if the options were freely traded, nor assume that these amounts
are the same as those reported for income tax purposes.
|
(2)
|
Paid to KMSmith LLC, an entity controlled by Mr. Smith.
|
Narrative Disclosure to Summary Compensation Table
Compensation and Organization Committee
The Board has established
a Compensation and Organization Committee (the “Compensation Committee”), and has adopted a written charter for the
Compensation Committee, effective August 2015. The overall purpose of the Compensation Committee is to act on behalf of the Board
and in the best interest of the Company’s shareholders to support the Company’s efforts to attract, retain, develop
and reward employees to achieve its annual and strategic objectives. The written charter for the Compensation Committee sets out
the role of the Chair of the Compensation Committee.
The responsibilities
of the Compensation Committee generally include: (1) recommending compensation policies to the Board for approval and thereafter
implementing such policies; (2) ensuring the Company has programs in place to attract and develop management of the highest caliber
and a process to provide for the orderly succession of management; (3) assessing and reporting to the Board on the performance
of the CEO; (4) reviewing the compensation of the CEO and other officers and members of the Board and making recommendations in
respect thereof to the Board; (5) reviewing and approving any proposed amendments to the Company’s incentive stock options
plan; (6) making recommendations to the Board concerning stock option grants; and (7) overseeing and considering the implications
and risks associated with the Company’s compensation policies.
The Compensation Committee
is responsible for assisting the Board in monitoring, reviewing and approving compensation policies and practices of the Company
and its subsidiaries and administering the Company’s Incentive Stock Option Plan. With regard to the CEO, the Compensation
Committee is responsible for reviewing and approving corporate goals and objectives relevant to the CEO’s compensation, evaluating
the CEO’s performance in light of those goals and objectives and making recommendations to the Board with respect to the
CEO’s compensation level based on this evaluation. In consultation with the CEO, the Compensation Committee makes recommendations
to the Board on the framework of executive remuneration and its cost and on specific remuneration packages for each of the directors
and officers other than the CEO, including recommendations regarding awards under equity compensation plans. The Compensation Committee
also reviews executive compensation disclosure before the Company publicly discloses the information. The Compensation Committee’s
decisions are typically reflected in consent resolutions.
There is currently
no formal executive compensation program in place. The Board, in conjunction with the Compensation Committee, consider compensation
and rewards to senior management on the basis of individual and corporate performance, both in the short term and the long term,
while at the same time being mindful of the responsibility that the Company has to its shareholders. The members of the Compensation
Committee use their own experience and familiarity with the industry to determine what they believe to be reasonable salaries.
The base salaries
of senior management of the Company are set at levels which are considered by the members of the Compensation Committee to be competitive,
thereby enabling the Company to compete for and retain executives critical to the long term success of the Company. Initially,
salaries (or, for those executive officers who provide their services through consulting arrangements, consulting fees) are set
through negotiation when an executive officer joins the Company (with direct input from the Compensation Committee) and are subsequently
reviewed each fiscal year to determine if adjustments are required.
The incentive portion
of the compensation package consists primarily of the awarding of stock options. In addition, the Board has discretion where deemed
appropriate and financially affordable for the Company, to grant cash bonuses based on the performance of both the individual and
the Company. Share ownership opportunities through the grant of incentive stock options are provided to align the interests of
senior management of the Company with the longer-term interests of the shareholders of the Company.
In general, the Compensation
Committee considers that its compensation program should be relatively simple in concept, given the current stage of the Company’s
development, and that its focus should be balanced between reasonable current compensation and longer term compensation tied to
performance of the Company as a whole. The Compensation Committee has not established a formal set of benchmarks or performance
criteria to be met by the Company’s executive officers, rather, the members of the Compensation Committee use their own subjective
assessments of the success (or otherwise) of the Company to determine, collectively, whether or not the executive officers are
successfully achieving the Company’s business plan and strategy and whether they have over, or under, performed in that regard.
The Compensation Committee has not established any set or formal formula for determining executive officer compensation, either
as to the amount thereof or the specific mix of compensation elements, and compensation, and adjustments thereto, are set through
informal discussions at the Compensation Committee level.
To date, neither the
Compensation Committee nor the Board as a whole has considered the implications of the risks associated with the Company’s
compensation policies and practices. At this time, the Company does prohibit executive officers or directors from purchasing financial
instruments, including, for greater certainty, prepaid variable forward contracts, equity swaps, collars, or units of exchange
funds, that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly
or indirectly, by the executive officer or director.
Option-based Awards
The Company’s
Stock Option Plan is administered by the Compensation Committee, and is intended to advance the interests of the Company through
the motivation, attraction and retention of key employees, officers and directors of the Company and subsidiaries of the Company
and to secure for the Company and its shareholders the benefits inherent in the ownership of common shares of the Company by key
employees, officers, directors and consultants of the Company and subsidiaries of the Company. Grants of options under the Option
Plan are proposed/recommended by the CEO, and reviewed by the Compensation Committee. The Compensation Committee can approve, modify
or reject any proposed grants, in whole or in part. In general, the allocation of available options among the eligible participants
in the Option Plan is on an ad hoc basis, and there is no set formula for allocating available options, nor is there any fixed
benchmark or performance criteria to be achieved in order to receive an award of options.
The Compensation Committee
does not consider the “value” of any such option grants in determining the number of options to award to any individual,
as any such “value” is an accounting measure that is not relevant to incentivizing the individual. The timing of the
grants of options is determined by the Compensation Committee, and there is no regular interval for the awarding of option grants.
In general, a higher level of responsibility will attract a larger grant of options. Because the number of options available is
limited, in general, the Compensation Committee aims to have individuals at what it subjectively considers to be the same levels
of responsibility holding equivalent numbers of options, with additional grants being allocated for individuals who the Compensation
Committee believes are in a position to more directly affect the success of the Company through their efforts.
The Compensation Committee
looks at the overall number of options held by an individual (including the exercise price and remaining term of existing options
and whether any previously granted options have expired out of the money or were exercised) and takes such information into consideration
when reviewing proposed new grants. After considering the CEO’s recommendations and the foregoing factors, the resulting
proposed option grant (if any) is then submitted to the Board for approval.
During the fiscal
year ended June 30, 2015, the Compensation Committee approved all recommendations for the grant of incentive stock options proposed
by management (of which an aggregate of 2,800,000 (41%) were granted to executive officers, 1,800,000 (26%) were granted to directors
who are not executive officers and 2,220,000 (33%) were granted to non-executive officer employees and consultants).
During the fiscal
year ended June 30, 2016, the Compensation Committee approved all recommendations for the grant of incentive stock options proposed
by management (of which an aggregate of 2,450,000 (42%) were granted to executive officers, 1,600,000 (27%) were granted to directors
who are not executive officers and 1,825,000 (31%) were granted to non-executive officer employees and consultants)
Compensation Governance
The Company’s
Compensation Committee determines an appropriate amount of compensation for its executives, reflecting the need to provide incentive
and compensation for the time and effort expended by the executives while taking into account the financial and other resources
of the Company.
As of the date of
this prospectus, the Compensation Committee is comprised of Joseph Carrabba as the Chairman, David Beling and Michael Morris. All
members of the Compensation Committee are independent.
The Compensation Committee
has the authority to engage and compensate, at the expense of the Company, any outside advisor that it determines to be necessary
to permit it to carry out its duties (including compensation consultants and advisers), but it did not retain any such outside
consultants or advisors during the financial year ended June 30, 2016.
Employment Agreements
We have entered into
employment agreements with certain Company officers and key employees, including Mr. Mark Smith (who is listed in the executive
compensation table above).
The Company and KMSmith,
LLC (“KMSmith”) entered into a Consulting Agreement effective September 23, 2013 (the “Smith Agreement”).
Under the terms of the Smith Agreement, KMSmith, through Mark Smith, performs the duties and responsibilities of the Chief Executive
Officer of the Company and related services, for an indefinite term at a rate of $270,000 per annum, payable in equal monthly installments
of $22,500. KMSmith also received a one-time signing bonus of $165,000. Any other bonuses and incentive payments are payable at
the discretion of the Board of Directors. Mr. Smith is entitled to receive stock options under the Company’s Stock Option
Plan, which options are approved by the Board at the time of grant. The Company may terminate the Smith Agreement at any time without
notice or payment should KMSmith commit a material breach of the Smith Agreement. In the event the Smith Agreement is terminated
by the Company for any reason other than as set out in the Smith Agreement or if KMSmith terminates the Smith Agreement on the
occurrence of a Triggering Event, the Company shall pay KMSmith a lump sum termination fee equal to the annual salary in effect
at the termination date as well as the average of any annual bonuses or other cash payments for two calendar years immediately
preceding the year the termination occurs. A Triggering Event is defined as a substantial change in the nature of services to be
performed by KMSmith; a material breach by the Company of the Smith Agreement that is not remedied within 30 days; the ceasing
of the Company as a going concern; the failure of the Company to pay a material amount due; or a material reduction in salary.
KMSmith may terminate the Smith Agreement on 90 days’ written notice and, should the Company immediately accept such termination
notice, it shall pay KMSmith the sum of $69,904. Should a change of control of the Company occur (as that term is defined in the
Smith Agreement) and within one year, either a Triggering Event occurs and KMSmith terminates the Smith Agreement or KMSmith’s
engagement is terminated without the occurrence of a Triggering Event, then KMSmith shall be entitled to receive an amount equal
to the annual salary in effect at the termination date as well as the average of any annual bonuses or other cash payments for
two calendar years immediately preceding the year the termination occurs. In the event KMSmith is entitled to a termination payment
with respect to a change of control, any stock options previously granted to Mr. Smith shall become fully vested and shall
remain exercisable for the original term of grant despite a termination of KMSmith.
Stock Option, Stock Awards and Equity Incentive Plans
In accordance with
the Company’s Option Plan the Company granted certain of its executive officers stock options during the Company’s
2015 and 2016 fiscal years; no other equity based awards were granted to executive officers during the 2015 or 2016 fiscal year.
The following table
sets forth the outstanding equity awards for each named executive officer at June 30, 2016. The Company has not granted stock based
awards to any of its named executive officers.
Outstanding Equity Awards at Fiscal Year-End
|
|
Option Awards
|
|
|
|
|
Name and Principal Position (a)
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(b)
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(c)
|
|
Option
Exercise Price
(C$) (e)
|
|
Option
Expiration Date
(f)
|
Mark A. Smith(1)
|
|
|
300,000
|
|
|
|
―
|
|
|
|
0.80
|
|
|
12/22/2017
|
|
|
|
375,000
|
|
|
|
375,000
|
|
|
|
0.62
|
|
|
1/19/2021
|
Mark A Smith Total
|
|
|
675,000
|
|
|
|
375,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott Honan(2)
|
|
|
370,000
|
|
|
|
―
|
|
|
|
0.50
|
|
|
5/9/2017
|
|
|
|
250,000
|
|
|
|
―
|
|
|
|
0.65
|
|
|
7/28/2017
|
|
|
|
200,000
|
|
|
|
―
|
|
|
|
0.80
|
|
|
12/22/2017
|
|
|
|
250,000
|
|
|
|
250,000
|
|
|
|
0.62
|
|
|
1/19/2021
|
Scott Honan Total:
|
|
|
1,070,000
|
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Ashburn, Jr.(3)
|
|
|
500,000
|
|
|
|
―
|
|
|
|
0.80
|
|
|
12/22/2017
|
|
|
|
175,000
|
|
|
|
175,000
|
|
|
|
0.62
|
|
|
1/19/2021
|
John Ashburn Jr. Total
|
|
|
675,000
|
|
|
|
175,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals:
|
|
|
2,420,000
|
|
|
|
800,000
|
|
|
|
|
|
|
|
|
(1)
|
On December 22, 2014, Mr. Smith was granted 300,000 options to purchase common shares for
a period of 3 years at a price of C$0.80. On January 21, 2016, Mr. Smith was granted 750,000 options to purchase common shares
for a period of 5 years at a price of C$0.62 and vest over a period of 18 months.
|
|
(2)
|
On May 9, 2014, Mr. Honan was granted 500,000 options to purchase common shares for a period
of 3 years at a price of C$0.50. On July 28, 2014, Mr. Honan was granted 250,000 options to purchase common shares for a period
of 3 years at a price of C$0.65. On December 22, 2014, Mr. Honan was granted 200,000 options to purchase common shares for
a period of 3 years at a price of $0.80. On January 21, 2016, Mr. Honan was granted 500,000 options to purchase common shares
for a period of 5 years at a price of C$0.62 and vest over a period of 18 months.
|
|
(3)
|
On December 22, 2014, Mr. Ashburn was granted 500,000 options to purchase common shares for
a period of 3 years at a price of C$0.80. On January 21, 2016, Mr. Ashburn was granted 350,000 options to purchase common
shares for a period of 5 years at a price of C$0.62 and vest over a period of 18 months.
|
Pension Plan Benefits
The Company does not
have in place any deferred compensation plan or pension plan that provides for payments or benefits at, following or in connection
with retirement.
Termination and change of control benefits
Except as described
above, the Company has not entered into any plans or arrangements in respect of remuneration received or that may be received by
the executive officers in the Company’s most recently completed financial year or current financial year in respect of compensating
such officers or directors in the event of termination of employment (as a result of resignation, retirement, change of control,
etc.) or a change in responsibilities following a change of control.
Compensation of Directors
As at the date of
this prospectus, the Company has five directors, one of which is also an executive officer, Mark Smith. For a description
of the compensation paid to the executive officer of the Company who also acts as a director, see “Summary Compensation Table”
above.
The following table
sets forth all compensation the Company granted to our directors, other than the director who is also an executive officer, for
the fiscal year ended June 30, 2016:
Name (a)
|
|
Option
Awards
(1)
($)
(d)
|
|
Total ($)
(h)
|
Joseph Carrabba
|
|
$
|
84,252
|
|
|
$
|
84,252
|
|
Dave Beling
|
|
$
|
63,189
|
|
|
$
|
63,189
|
|
Michael Morris
|
|
$
|
63,189
|
|
|
$
|
63,189
|
|
Joseph Cecil
(2)
|
|
$
|
63,189
|
|
|
$
|
63,189
|
|
Anthony Fulton
|
|
$
|
63,189
|
|
|
$
|
63,189
|
|
Anna Castner Wightman
(3)
|
|
|
―
|
|
|
|
―
|
|
|
(1)
|
The value of the option-based awards was determined using the Black-Scholes option-pricing model,
with the following assumptions:
|
|
|
2016
|
Risk-free interest rate
|
|
|
0.75
|
%
|
Expected dividend yield
|
|
|
0
|
%
|
Expected stock price volatility
|
|
|
98.2
|
%
|
Expected life of options
|
|
|
2.15 years
|
|
Option pricing models require
the input of highly subjective assumptions, particularly as to the expected volatility of the stock. Changes in these assumptions
can materially affect the fair value estimate, and therefore it is management’s view that the existing models may not provide
a single reliable measure of the fair value of the Company’s stock option grants. The Company uses an option-pricing model
because there is no market for which employee options may be freely traded. Readers are cautioned not to assume that the value
derived from the model is the value that an employee might receive if the options were freely traded, nor assume that these amounts
are the same as those reported for income tax purposes.
|
(2)
|
Mr. Cecil ceased to be a director effective as of December
9, 2016.
|
|
(3)
|
Ms. Wightman was appointed to the board on February 23, 2016, however initial board options were
not awarded until July 2016.
|
For the fiscal year
ending June 30, 2016, the directors of the Company did not receive a fee for serving on the board of directors of the Company.
The directors of the Company have no standard compensation arrangements, or any other arrangements, with the Company, except as
herein disclosed. Executive officers of the Company who also act as directors of the Company do not receive any additional compensation
for services rendered in such capacity, other than as paid by the Company to such Executive Officers in their capacity as Executive
officers. See “Summary Compensation Table” above.
Compensation Committee Interlocks and Insider Participation
During fiscal year
ended June 30, 2016, Joseph Carrabba, Anthony Fulton, David Beling and Michael Morris served on the Compensation Committee. None
of these individuals is an employee or an officer of the Company or had any relationship with the Company requiring disclosure
under Item 404 of Regulation S-K. Anthony Fulton resigned from the Company’s Board of Directors on January 29, 2016.
Security
Ownership of Certain Beneficial Owners and Management
Security Ownership of Management
As of June 1, 2017
the Company had 197,819,163 Common Shares issued and outstanding. The following table sets forth the beneficial ownership of the
Company’s Common Shares as of June 1, 2017 by each person who serves as a director and/or an executive officer of NioCorp
on that date, and the number of shares beneficially owned by all of the Company’s directors and named executive officers
as a group:
Name and Address of
Beneficial Owner
|
|
Position
|
|
Amount and Nature
of Beneficial
Ownership (1)
|
|
Percent of
Common
Shares
|
Mark A. Smith, PE, Esq
Highlands Ranch, Colorado,
USA
|
|
President, Chief Executive Officer and Chairman
|
|
|
19,935,445
|
(2)
|
|
|
10.09
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Neal Shah
Superior, Colorado, USA
|
|
Chief Financial Officer
|
|
|
1,104,500
|
(3)
|
|
|
0.56
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Scott Honan
Centennial, Colorado, USA
|
|
Vice President, Business Development
|
|
|
1,080,000
|
(4)
|
|
|
0.55
|
%
|
|
|
|
|
|
|
|
|
|
|
|
John Ashburn, Jr.
Littleton, Colorado, USA
|
|
Vice-President, General Counsel and Corporate Secretary
|
|
|
1,724,452
|
(5)
|
|
|
0.87
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Jim Sims
Golden Colorado, USA
|
|
Vice-President, External Affairs
|
|
|
508,419
|
(6)
|
|
|
0.26
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Joseph A. Carrabba
Key Largo, Florida, USA
|
|
Lead Director
|
|
|
1,000,000
|
(7)
|
|
|
0.51
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Michael Morris
San Luis Obispo, California, USA
|
|
Director
|
|
|
855,250
|
(8)
|
|
|
0.43
|
%
|
|
|
|
|
|
|
|
|
|
|
|
David C. Beling
Grand Junction, Colorado, USA
|
|
Director
|
|
|
800,000
|
(9)
|
|
|
0.41
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Anna Castner Wightman
Omaha, Nebraska, USA
|
|
Director
|
|
|
378,000
|
(10)
|
|
|
0.19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
All current directors, executive officers and named executive officers as a group (9 persons)
|
|
|
|
|
27,386,066
|
|
|
|
13.84
|
%
|
Notes to Security Ownership of Management table shown above:
|
(1)
|
Calculated in accordance with Rule 13d-3 of the Exchange Act.
|
|
(2)
|
As of June 1, 2017, Mr. Smith beneficially owns 18,770,445 Common Shares. He beneficially
owns 115,000 exercisable warrants. Each warrant entitles Mr. Smith to acquire one Common Share at a price of C$0.75 until
January 2019. In addition, he beneficially owns 1,050,000 vested stock options comprised of the following: On December 22, 2014,
Mr. Smith was granted 300,000 options to purchase Common Shares for a period of three years at a price of C$0.80. On January
21, 2016, Mr. Smith was granted 750,000 options to purchase Common Shares for a period of five years at a price of C$0.62
and vest over a period of 18 months with 75% having vested at this time and the balance in the next sixty days. On March 17, 2017,
Mr. Smith was granted 650,000 options to purchase Common Shares for a period of five years at a price of C$0.76 which vest
over a period of 18 months and have not vested at this time.
|
|
(3)
|
As of June 1, 2017, Mr. Shah beneficially owns 54,500 Common Shares. In addition, he
beneficially owns 1,050,000 vested stock options comprised of the following. On September 2, 2014, Mr. Shah was granted
500,000 options to purchase Common Shares for a period of three years at a price of C$0.76. On December 22, 2014,
Mr. Shah was granted 200,000 options to purchase Common Shares for a period of three years at a price of C$0.80. On
January 21, 2016, Mr. Shah was granted 350,000 options to purchase Common Shares for a period of five years at a price
of C$0.62 and vest over a period of 18 months with 75% having vested at this time and the balance in the next sixty days . On
March 17, 2017, Mr. Shah was granted 400,000 options to purchase Common Shares for a period of five years at a price of
C$0.76 which vest over a period of 18 months and have not vested at this time.
|
|
(4)
|
As of June 1, 2017, Mr. Honan beneficially owns 130,000 Common Shares. In addition, he beneficially
owns 950,000 vested stock options comprised of the following: On July 28, 2014, Mr. Honan was granted 250,000 options to purchase
Common Shares for a period of three years at a price of C$0.65. On December 22, 2014, Mr. Honan was granted 200,000 options
to purchase Common Shares for a period of three years at a price of C$0.80. On January 21, 2016, Mr. Honan was granted 500,000
options to purchase Common Shares for a period of five years at a price of C$0.62 and vest over a period of 18 months with 75%
having vested at this time and the balance in the next sixty days . On March 17, 2017, Mr. Honan was granted 400,000 options
to purchase Common Shares for a period of five years at a price of C$0.76 which vest over a period of 18 months and have not vested
at this time.
|
|
(5)
|
As of June 1, 2017, Mr. Ashburn beneficially owns 762,226 Common Shares. He beneficially owns
112,226 exercisable warrants. Each warrant entitles Mr. Ashburn to acquire one Common Share at a price of C$0.85 until March
2020. In addition, he beneficially owns 850,000 vested stock options comprised of the following: On December 22, 2014, Mr. Ashburn
was granted 500,000 options to purchase Common Shares for a period of three years at a price of C$0.80. On January 21, 2016, Mr. Ashburn
was granted 350,000 options to purchase Common Shares for a period of five years at a price of C$0.62 and vest over a period of
18 months with 75% having vested at this time and the balance in the next sixty days. On March 17, 2017, Mr. Ashburn was granted
400,000 options to purchase Common Shares for a period of five years at a price of C$0.76 which vest over a period of 18 months
and have not vested at this time.
|
|
(6)
|
As of June 1, 2017, Mr. Sims beneficially owns 8,419 Common Shares. In addition, he beneficially
owns 500,000 vested stock options comprised of the following: On January 21, 2016, Mr. Sims was granted 500,000 options to
purchase Common Shares for a period of five years at a price of C$0.62 and vest over a period of 18 months with 75% having vested
at this time and the balance in the next sixty days. On March 17, 2017, Mr. Sims was granted 400,000 options to purchase Common
Shares for a period of five years at a price of C$0.76 which vest over a period of 18 months and have not vested at this time.
|
|
(7)
|
As of June 1, 2017, Mr. Carrabba beneficially owns 100,000 Common Shares. In addition, he
beneficially owns 800,000 vested stock options comprised of the following: On December 22, 2014, Mr. Carrabba was granted
500,000 options to purchase Common Shares for a period of three years at a price of C$0.80. On January 21, 2016, Mr. Carrabba
was granted 400,000 options to purchase Common Shares for a period of five years at a price of C$0.62 and vest over a period of
18 months with 75% having vested at this time and the balance in the next sixty days. On March 17, 2017, Mr. Carrabba was
granted 350,000 options to purchase Common Shares for a period of five years at a price of C$0.76 which vest over a period of 18
months and have not vested at this time.
|
|
(8)
|
As of June 1, 2017, Mr. Morris beneficially owns 55,250 Common Shares. In addition, he beneficially
owns 855,250 vested stock options comprised of the following: On July 28, 2014, Mr. Morris was granted 500,000 options to
purchase Common Shares for a period of three years at a price of C$0.65. On January 21, 2016, Mr. Morris was granted 300,000
options to purchase Common Shares for a period of five years at a price of C$0.62 and vest over a period of 18 months with 75%
having vested at this time and the balance in the next sixty days. On March 17, 2017, Mr. Morris was granted 350,000 options
to purchase Common Shares for a period of five years at a price of C$0.76 which vest over a period of 18 months and have not vested
at this time.
|
|
(9)
|
As of June 1, 2017, Mr. Beling beneficially owns 350,000 Common Shares. In addition, he beneficially
owns 450,000 vested stock options comprised of the following: On July 28, 2014, Mr. Beling was granted 100,000 options to
purchase Common Shares for a period of three years at a price of C$0.65. On December 22, 2014, Mr. Beling was granted 50,000
options to purchase Common Shares for a period of three years at a price of C0.80. On January 21, 2016, Mr. Beling was granted
300,000 options to purchase Common Shares for a period of five years at a price of C$0.62 and vest over a period of 18 months with
75% having vested at this time and the balance in the next sixty days. On March 17, 2017, Mr. Beling was granted 300,000 options
to purchase Common Shares for a period of five years at a price of C$0.76 which vest over a period of 18 months and have not vested
at this time.
|
|
(10)
|
As of June 1, 2017, Mrs. Wightman beneficially owns 3,000 Common Shares. In addition, she
beneficially owns 375,000 vested stock options comprised of the following. On July 21, 2016, Mrs. Wightman was granted 500,000
options to purchase Common Shares for a period of five years at a price of C$0.94 which vest over a period of 18 months with 50%
having vested at this time and an additional 25% having vested in the next sixty days. On March 17, 2017, Mrs. Wightman was
granted 300,000 options to purchase Common Shares for a period of five years at a price of C$0.76 which vest over a period of 18
months and have not vested at this time.
|
Security Ownership of Certain Beneficial Owners
As of June 1, 2017,
the Company is not aware of any persons that beneficially own more than 5% of its outstanding Common Shares who does not serve
as an executive officer or director of the Company.
Employee/Director Hedging Is Not Permitted
The Company’s
insider trading policy prohibits hedging in the Company’s securities by employees, officers and directors of the Company
or their designees.
Change in Control Arrangements
As of June 1, 2017,
there are no arrangements known to us that would result in a change in control of the Company. We are not, to the best of our knowledge,
directly or indirectly owned or controlled by another corporation or foreign government.
Certain
Relationships and Related Transactions
Related Party Transactions
The following sets
forth information regarding transactions between the Company (and its subsidiaries) and its officers, directors and significant
shareholders since the beginning of its fiscal year ended June 30, 2014.
Employment Agreements:
See “Executive
Compensation - Employment Agreements” above for a discussion of the employment agreements between the Company and Mr. Smith.
Loan Transactions:
On June 17, 2015,
the Company entered into the Original Smith Loan in the amount of $1.5 million with Mark A. Smith, Chief Executive Officer
and Executive Chairman of NioCorp.
On July 1, 2015, the
Company entered into a non-revolving credit facility agreement (collectively, with the loan above, the “Smith Loans”)
in the amount of $2.0 million with Mark Smith and completed a drawdown of $0.5 million on that day, and an additional $0.1 million
was drawn under the credit facility on December 2, 2015. A total indebtedness of $2.1 million was outstanding as of December 31,
2015. Both arrangements bear an interest rate of 10%, are secured by the Company’s assets pursuant to a general security
agreement, are subject to both a 2.5% establishment fee and 2.5% prepayment fee.
With the receipt of
additional funding proceeds from the December Private Placement and Convertible Security, on January 13, 2016, the Company repaid
$1.1 million of the outstanding Smith Loans, representing 100% of amounts drawn down under the credit facility, plus $0.5 million
of the amount due under the one-year loan. During the year ended June 30, 2016, $108,000 of interest was paid under the Smith loans,
with $53,000 remaining payable as of June 30, 2016.
Effective June 16
2016, the Company and Mr. Smith agreed to extend the due date for the remaining loan amount of $1 million until June 16, 2017.
On January 16, 2017,
the Company and Mr. Smith entered into the Smith Credit Agreement pursuant to which Mr. Smith agreed to make available
to the Company a credit facility of up to $2,000,000. Under the Smith Credit Agreement, Mr. Smith has agreed to advance amounts
requested by the Company under the credit facility (the “Loan”) up to the $2,000,000 maximum. The credit facility is
non-revolving and amounts paid back under the terms of the Smith Credit Agreement do not again become available for drawdowns at
the request of the Company.
The Company will pay
interest to Mr. Smith on amounts outstanding under the Loan and on any overdue interest at a rate equal to 10% per annum,
calculated monthly in arrears, through to the date of repayment of the Loan. Interest on the Loan will be computed on the basis
of a 360-day year comprised on twelve 30-day months. Mr. Smith will also receive an establishment fee equal to 2.5% of the
amount of any drawdown payable at the time of the drawdown as consideration of the advancement of such drawdown.
Any outstanding balance
on the Loan, including accrued interest, shall be immediately due and payable by the Company on the date of termination of the
Smith Credit Agreement on January 16, 2018 or upon the occurrence of an Event of Default (as described below). The Company can
pre-pay the Loan at any time without notice and without penalty or prepayment fees.
Drawdowns under the
Smith Credit Agreement must be made on a business day before the termination date for a minimum amount of $10,000 and not cause
to total amount advanced to exceed $2,000,000. Further, Mr. Smith must have received the written drawdown request along with
payment of the establishment fee. Each drawdown request is subject to the consent of Mr. Smith, which may be withheld in Mr. Smith’s
sole discretion.
Under the terms of
the Smith Credit Agreement, the Company has covenanted that so long as monies are outstanding under the Loan, it will: (a) repay,
or cause to be repaid, the Loan and all other monies required to be paid to Mr. Smith in accordance with the Agreement and
(b) duly observe and perform all obligations and agreement set forth in the Agreement.
The following occurrences
will trigger and Event of Default under the Smith Credit Agreement, causing the principal amount of Loan outstanding, plus accrued
interest, costs and all other monies owing to Mr. Smith to immediately become payable upon demand by Mr. Smith: (a) if
the Company shall default in any payment of principal, interest or other amount when the same is required under the Smith Credit
Agreement and such default has continued for a period of seven (7) days after notice in writing has been given by Mr. Smith
to the Company regarding such default, (b) if the Company shall become insolvent, make a general assignment for the benefit of
its creditors, or passes a resolution for the winding-up, merger or amalgamation of the Company, or the Company declares bankruptcy
or a receiver is appointed under applicable law, or a compromise or arrangement is proposed by the Company to its creditors, or
the occurrence of similar events (c) if the Company defaults in observing or performing any other covenant or agreement of the
Smith Credit Agreement and such default has continued for a period of seven (7) days after notice in writing has been given by
Mr. Smith to the Company regarding such default.
The Smith Credit Agreement
is secured, along with the Company’s prior $1 million loan from Mr. Smith pursuant to a loan agreement dated June 17,
2015, by all of the Company’s assets pursuant to a general security agreement between the Company and Mr. Smith dated
June 17, 2015.
On March 24, 2017,
we announced that we had entered into amending agreements dated March 20, 2017, with Mark Smith to extend the due dates of the
Smith Credit Agreement and Original Smith Loan to June 16, 2018 and June 17, 2018, respectively.
As of June 1, 2017,
there was $1,000,000 and $175,000 principal amount outstanding under the Smith Loans and the Smith Credit Agreement, respectively.
Related Party Purchase in Equity Offering:
|
1.
|
Mark Smith acquired 3,400,000 Common Shares of the Company under a private placement closed October
21, 2013;
|
|
2.
|
Mark Smith acquired 3,400,000 Common Shares of the Company under a private placement closed December
23, 2013;
|
|
3.
|
Mark Smith acquired 2,882,483 Common Shares of the Company under a private placement closed March
19, 2014;
|
|
4.
|
Mark Smith acquired 4,132,232 2014 Special Warrants under the 2014 Offering; and
|
|
5.
|
John Ashburn acquired 112,226 February 14, 2017 Units under our February 2017 Offering.
|
The Company does not
currently have in place any specific policy or procedure in respect of the purchase of securities of the Company from treasury
by the Company’s directors or officers. Sections 147-153 of the BCBCA set out rules and procedures applicable to all British
Columbia corporations, pursuant to which a director presented with a resolution in respect of any matter (including an equity issuance)
in respect of which he/she has an interest must disclose that interest in writing to the Company’s board of directors prior
to the approval of such matter. This procedure ensures that each equity issuance to a director or officer of the Company is approved
by all directors of the Company not involved in such sale.
Director Independence
As
of June 1, 2017, the Company’s Board of Directors consists of Messrs. Smith, Carrabba, Beling, Morris and Ms. Wightman.
The Company utilizes the definition of “independent” as it is set forth in Section 803A of the NYSE MKT Company Guide.
Further, the board considers all relevant facts and circumstances in its determination of independence of all members of the board
(including any relationships). Currently, Messrs. Carrabba, Beling, Morris and Ms. Wightman are considered independent directors.
Anthony Fulton, who was a director during our fiscal year ended June 30, 2016, before his resignation, was considered an independent
director, as determined in accordance with Section 803A of the NYSE MKT Company Guide and the other factors set forth above.
Interests
of Experts
The
financial statements as of June 30, 2016 and 2015 and for the years then ended June 30, 2016 and 2015 included in this
Prospectus have been so included in reliance on the report of BDO USA, LLP, an independent registered public accounting firm
(the report on the financial statements contains an explanatory paragraph regarding the Company’s ability to continue
as a going concern), appearing elsewhere herein given on the authority of said firm as
experts in auditing and accounting.
Certain portions
of the description of the Elk Creek Project were summarized or extracted from a technical report prepared in accordance with NI
43-101 dated October 16, 2015 and entitled “Updated Preliminary Economic Assessment, Elk Creek Niobium Project, Nebraska”
those extracts were reviewed and approved by Eric Larochelle, BEng (Roche Director, Specialty Metals & Hydrometallurgy) and
Jeff Osborn, BEng Mining, MMSAQP (SRK Principal Consultant, Mining Engineer).
None of the above
experts has or is to receive in connection with the offering, a substantial interest, direct or indirect, in the Company or any
of its subsidiaries nor was it connected with the Company or any of its subsidiaries as a promoter, managing or principal underwriter,
voting trustee, Director, officer, or employee.
Where
You Can Find More Information
We have filed with
the SEC a registration statement on Form S-1, including exhibits and schedules, under the Securities Act with respect to the Common
Shares to be sold in this offering. This prospectus, which constitutes a part of the registration statement, contains all of the
information set forth in the registration statement or the exhibits and schedules that are part of the registration statement.
For further information about us and our Common Shares, you may refer to the registration statement.
You may read, without
charge, and copy, at prescribed rates, all or any portion of the registration statement or any reports, statements or other information
in the files at the public reference room at the SEC’s principal office at 100 F Street NE, Washington, D.C. 20549. You may
request copies of these documents, for a copying fee, by writing to the SEC. You may call the SEC at 1-800-SEC-0330 for further
information on the operation of its public reference room. Our filings, including the registration statement, will also be available
to you on the Internet website maintained by the SEC at http://www.sec.gov.
Index
to Financial Statements
The following audited
consolidated financial statements of the Company as at and for the years ended June 30, 2016 and 2015 are attached as pages F-1
through F-21 and are included herein by reference:
The following unaudited
condensed consolidated interim financial statements of the Company as at and for the three and nine months ended March 31, 2017
and 2016 are attached as pages F-22 through F-35 and are included herein by reference:
NioCorp Developments Ltd.
Consolidated Financial Statements
June 30, 2016
Report of Independent Registered Public Accounting Firm
Board of Directors and Shareholders
NioCorp Developments Ltd.
Denver, Colorado
We have audited the
accompanying consolidated balance sheets of NioCorp Developments Ltd. (the “Company”) as of June 30, 2016 and 2015
and the related consolidated statements of operations and comprehensive loss, shareholders’ equity, and cash flows for the
years then ended June 30, 2016 and 2015. These financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits
in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the
consolidated financial statements referred to above present fairly, in all material respects, the financial position of NioCorp
Developments Ltd. at June 30, 2016 and 2015, and the results of its operations and its cash flows for the years then ended June
30, 2016 and 2015, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated
financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 4 to the
consolidated financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that
raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are
also described in Note 4. The consolidated financial statements do not include any adjustments that might result from the outcome
of this uncertainty. Our opinion is not modified with respect to this matter.
/s/ BDO USA, LLP
Spokane, Washington
September 1, 2016
NioCorp Developments Ltd.
Consolidated Balance Sheets
(expressed in thousands of U.S. dollars, except share data)
|
|
|
|
As of June 30,
|
|
|
Note
|
|
2016
|
|
2015
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
$
|
4,412
|
|
|
$
|
753
|
|
Receivables
|
|
|
|
|
5
|
|
|
|
14
|
|
Prepaid expenses
|
|
|
|
|
101
|
|
|
|
58
|
|
Total current assets
|
|
|
|
|
4,518
|
|
|
|
825
|
|
Non-current
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
|
|
65
|
|
|
|
67
|
|
Available for sale securities at fair value
|
|
|
|
|
32
|
|
|
|
46
|
|
Equipment
|
|
|
|
|
14
|
|
|
|
20
|
|
Mineral interests
|
|
5
|
|
|
10,617
|
|
|
|
10,617
|
|
Total assets
|
|
|
|
$
|
15,246
|
|
|
$
|
11,575
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
|
$
|
1,256
|
|
|
$
|
4,440
|
|
Related party loan
|
|
9
|
|
|
1,000
|
|
|
|
1,500
|
|
Flow-through tax liability
|
|
6
|
|
|
—
|
|
|
|
624
|
|
Total current liabilities
|
|
|
|
|
2,256
|
|
|
|
6,564
|
|
Convertible debt
|
|
7
|
|
|
6,466
|
|
|
|
|
|
Derivative liability, convertible debt
|
|
7
|
|
|
330
|
|
|
|
—
|
|
Total liabilities
|
|
|
|
|
9,052
|
|
|
|
6,564
|
|
Commitments
|
|
13
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
Common stock, unlimited shares authorized; shares outstanding: 180,467,990 at June 30, 2016 and 156,420, 334 at June 30, 2015
|
|
8
|
|
|
58,401
|
|
|
|
47,617
|
|
Additional paid-in capital
|
|
|
|
|
8,630
|
|
|
|
7,250
|
|
Accumulated deficit
|
|
|
|
|
(60,222
|
)
|
|
|
(48,814
|
)
|
Accumulated other comprehensive loss
|
|
|
|
|
(615
|
)
|
|
|
(1,042
|
)
|
Total shareholder equity
|
|
|
|
|
6,194
|
|
|
|
5,011
|
|
Total liabilities and equity
|
|
|
|
$
|
15,246
|
|
|
$
|
11,575
|
|
The accompanying notes are an integral part
of these consolidated financial statements
NioCorp Developments Ltd.
Consolidated Statement of Operations and Comprehensive Loss
(expressed in thousands of U.S. dollars, except share and per share data)
|
|
|
|
For the year ended
June 30,
|
|
|
Note
|
|
2016
|
|
2015
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
|
|
|
|
$
|
201
|
|
|
$
|
242
|
|
Depreciation
|
|
|
|
|
|
|
9
|
|
|
|
10
|
|
Employee related costs
|
|
|
|
|
|
|
1,988
|
|
|
|
3,413
|
|
Finance costs
|
|
|
|
|
|
|
242
|
|
|
|
39
|
|
Professional fees
|
|
|
|
|
|
|
512
|
|
|
|
435
|
|
Exploration expenditures
|
|
|
10
|
|
|
|
4,719
|
|
|
|
18,051
|
|
Other operating expenses
|
|
|
|
|
|
|
1,847
|
|
|
|
3,178
|
|
Impairment of equipment
|
|
|
|
|
|
|
—
|
|
|
|
112
|
|
Total operating expenses
|
|
|
|
|
|
|
9,518
|
|
|
|
25,480
|
|
Change in financial instrument fair value
|
|
|
7
|
|
|
|
2,719
|
|
|
|
—
|
|
Other gains
|
|
|
6
|
|
|
|
(587
|
)
|
|
|
—
|
|
Interest and other income
|
|
|
|
|
|
|
—
|
|
|
|
(16
|
)
|
Foreign exchange (gain) loss
|
|
|
|
|
|
|
(528
|
)
|
|
|
434
|
|
Interest expense
|
|
|
|
|
|
|
275
|
|
|
|
—
|
|
Loss (gain) on available for sale securities
|
|
|
|
|
|
|
11
|
|
|
|
(28
|
)
|
Loss before income taxes
|
|
|
|
|
|
|
11,408
|
|
|
|
25,870
|
|
Income tax benefit
|
|
|
|
|
|
|
—
|
|
|
|
(2,755
|
)
|
Net loss
|
|
|
|
|
|
$
|
11,408
|
|
|
$
|
23,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive (gain) loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
$
|
11,408
|
|
|
$
|
23,115
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
Reporting currency translation
|
|
|
|
|
|
|
(427
|
)
|
|
|
959
|
|
Total comprehensive loss
|
|
|
|
|
|
$
|
10,981
|
|
|
$
|
24,074
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common share, basic and diluted
|
|
|
|
|
|
$
|
0.07
|
|
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
164,038,509
|
|
|
|
136,045,244
|
|
The accompanying notes are an integral part
of these consolidated financial statements
NioCorp Developments Ltd.
Consolidated Statement of Cash Flows
(expressed in thousands of U.S. dollars)
|
|
For the year
ended June 30,
|
|
|
2016
|
|
2015
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Total loss for the period
|
|
$
|
(11,408
|
)
|
|
$
|
(23,115
|
)
|
Adjustments for:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
9
|
|
|
|
10
|
|
Change in financial instrument fair value
|
|
|
2,719
|
|
|
|
—
|
|
Warrants expense
|
|
|
540
|
|
|
|
2,159
|
|
Unrealized loss (gain) on available-for-sale investments
|
|
|
11
|
|
|
|
(28
|
)
|
Impairment of equipment
|
|
|
—
|
|
|
|
112
|
|
Accretion of convertible debt
|
|
|
81
|
|
|
|
—
|
|
Deferred taxes
|
|
|
—
|
|
|
|
(2,755
|
)
|
Foreign exchange (gain) loss
|
|
|
(247
|
)
|
|
|
183
|
|
Other non-cash items
|
|
|
(587
|
)
|
|
|
—
|
|
Share-based compensation
|
|
|
1,049
|
|
|
|
2,506
|
|
|
|
|
(7,833
|
)
|
|
|
(20,928
|
)
|
Change in non-cash working capital items:
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
8
|
|
|
|
25
|
|
Prepaid expenses
|
|
|
(63
|
)
|
|
|
(39
|
)
|
Accounts payable and accrued liabilities
|
|
|
(3,086
|
)
|
|
|
3,625
|
|
Net cash used in operating activities
|
|
|
(10,974
|
)
|
|
|
(17,317
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
—
|
|
|
|
(14
|
)
|
Acquisition of equipment
|
|
|
(4
|
)
|
|
|
(27
|
)
|
Net cash used in investing activities
|
|
|
(4
|
)
|
|
|
(41
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Proceeds from issuance of capital stock
|
|
|
9,993
|
|
|
|
13,979
|
|
Share issue costs
|
|
|
(151
|
)
|
|
|
(521
|
)
|
Issuance of convertible debt, net of issuance costs
|
|
|
5,060
|
|
|
|
—
|
|
Related party debt draws
|
|
|
600
|
|
|
|
1,500
|
|
Related party debt repayment
|
|
|
(1,100
|
)
|
|
|
—
|
|
Net cash provided by financing activities
|
|
|
14,402
|
|
|
|
14,958
|
|
Exchange rate effect on cash
|
|
|
235
|
|
|
|
345
|
|
Change in cash during the period
|
|
|
3,659
|
|
|
|
(2,055
|
)
|
Cash, beginning of period
|
|
|
753
|
|
|
|
2,808
|
|
Cash, end of period
|
|
$
|
4,412
|
|
|
$
|
753
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
Amounts paid for interest
|
|
$
|
144
|
|
|
$
|
—
|
|
Amounts paid for income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-cash financing transaction
|
|
$
|
638
|
|
|
$
|
—
|
|
The accompanying notes are an integral part
of these consolidated financial statements
NioCorp Developments Ltd.
Consolidated Statements of Shareholders’ Equity
(expressed in thousands of U.S. dollars, except share data)
|
|
Common
Shares
Outstanding
|
|
Common
Stock
|
|
Additional
paid-in
capital
|
|
Deficit
|
|
Accumulated
other
comprehensive
income
|
|
Total
|
Balance, July 1, 2014
|
|
|
122,884,716
|
|
|
$
|
33,667
|
|
|
$
|
2,933
|
|
|
$
|
(25,699
|
)
|
|
$
|
(83
|
)
|
|
$
|
10,818
|
|
Private placement - November 2014
|
|
|
19,245,813
|
|
|
|
8,846
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,846
|
|
Private placement - March 2015
|
|
|
2,914,000
|
|
|
|
1,722
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,722
|
|
Issue costs
|
|
|
—
|
|
|
|
(708
|
)
|
|
|
187
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(521
|
)
|
Exercise of warrants
|
|
|
5,125,805
|
|
|
|
2,368
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,368
|
|
Exercise of options
|
|
|
6,250,000
|
|
|
|
1,042
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,042
|
|
Fair value of stock options exercised
|
|
|
—
|
|
|
|
680
|
|
|
|
(680
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Fair value of warrants granted to ThyssenKrupp
|
|
|
—
|
|
|
|
—
|
|
|
|
1,854
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,854
|
|
Fair value of warrants for financial services agreement
|
|
|
—
|
|
|
|
—
|
|
|
|
268
|
|
|
|
—
|
|
|
|
—
|
|
|
|
268
|
|
Fair value of warrants for sponsorship agreement
|
|
|
—
|
|
|
|
—
|
|
|
|
99
|
|
|
|
—
|
|
|
|
—
|
|
|
|
99
|
|
Share-based payments
|
|
|
—
|
|
|
|
—
|
|
|
|
2,589
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,589
|
|
Reporting currency presentation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(959
|
)
|
|
|
(959
|
)
|
Loss for the year
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(23,115
|
)
|
|
|
—
|
|
|
|
(23,115
|
)
|
Balance, June 30, 2015
|
|
|
156,420,334
|
|
|
$
|
47,617
|
|
|
$
|
7,250
|
|
|
$
|
(48,814
|
)
|
|
$
|
(1,042
|
)
|
|
$
|
5,011
|
|
Exercise of warrants
|
|
|
12,549,309
|
|
|
|
5,838
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,838
|
|
Exercise of options
|
|
|
1,415,000
|
|
|
|
405
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
405
|
|
Fair value of broker warrants granted
|
|
|
—
|
|
|
|
—
|
|
|
|
15
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15
|
|
Fair value of Lind Warrants granted
|
|
|
—
|
|
|
|
—
|
|
|
|
620
|
|
|
|
—
|
|
|
|
—
|
|
|
|
620
|
|
Private placement - January 2016
|
|
|
9,074,835
|
|
|
|
3,750
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,750
|
|
Debt conversions
|
|
|
1,008,512
|
|
|
|
638
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
638
|
|
Share issuance costs
|
|
|
—
|
|
|
|
(151
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(151
|
)
|
Fair value of stock options exercised
|
|
|
—
|
|
|
|
304
|
|
|
|
(304
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Share-based payments
|
|
|
—
|
|
|
|
—
|
|
|
|
1,049
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,049
|
|
Reporting currency presentation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
427
|
|
|
|
427
|
|
Loss for the year
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(11,408
|
)
|
|
|
—
|
|
|
|
(11,408
|
)
|
Balance, June 30, 2016
|
|
|
180,467,990
|
|
|
$
|
58,401
|
|
|
$
|
8,630
|
|
|
$
|
(60,222
|
)
|
|
$
|
(615
|
)
|
|
$
|
6,194
|
|
The accompanying notes are an integral part
of these consolidated financial statements
NioCorp
Developments Ltd.
Notes to Consolidated Financial Statements
June 30, 2016
(expressed in thousands of U.S. dollars, unless otherwise stated
)
|
1.
|
Description of Business
|
NioCorp Developments Ltd. (the
“Company”) was incorporated on February 27, 1987 under the laws of the Province of British Columbia and currently operates
in one reportable operating segment consisting of exploration and development of mineral deposits in North America, specifically,
the Elk Creek Niobium/Scandium/Titanium property (the “Elk Creek Project”) located in Southeastern Nebraska.
These consolidated financial
statements have been prepared on a going concern basis that contemplates the realization of assets and discharge of liabilities
at their carrying values in the normal course of business for the foreseeable future. These financial statements do not reflect
any adjustments that may be necessary if the Company is unable to continue as a going concern.
The Company currently earns
no operating revenues and will require additional capital in order to advance the Elk Creek Project. The Company’s ability
to continue as a going concern is uncertain and is dependent upon the generation of profits from mineral properties, obtaining
additional financing and maintaining continued support from its shareholders and creditors.
|
a)
|
Basis of Preparation and Consolidation These consolidated financial statements have been prepared
in conformity with generally accepted accounting principles of the United States of America (“US GAAP”). Certain transactions
include reference to Canadian dollars (“C$”) where applicable.
|
These consolidated financial
statements include the accounts of the Company and the subsidiaries listed in the following table. All intercompany transactions
and balances have been eliminated.
|
|
Country of
|
|
Ownership at June 30,
|
|
|
incorporation
|
|
2016
|
|
2015
|
0896800 BC Ltd.
|
|
Canada
|
|
|
100
|
%
|
|
|
100
|
%
|
Elk Creek Resources Corp.
|
|
USA
|
|
|
100
|
%
|
|
|
100
|
%
|
Silver Mountain Mines Corp.
|
|
USA
|
|
|
100
|
%
|
|
|
100
|
%
|
The preparation of consolidated
financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of expenses during the reporting period. The Company regularly evaluates estimates and assumptions related
to the deferred income tax asset valuations and share-based compensation. The Company bases its estimates and assumptions on current
facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of
which form the basis for making judgments about the other sources. The actual results experienced by the Company may differ materially
and adversely from the Company’s estimates. To the extent there are material differences between estimates and the actual
results, future results of operations will be affected.
|
3.
|
SIGNIFICANT ACCOUNTING POLICIES
|
|
a)
|
Exploration Stage Enterprise
|
The
Company is in the exploration stage of operation and devotes substantially all of its efforts to acquiring and exploring mining
interests that management believes should eventually provide sufficient net profits to sustain the Company’s existence. Until
such interests are engaged in commercial production, the Company will continue to seek additional funding to support the completion
of its exploration and development activities. The Company’s activities are subject to significant risks and uncertainties,
including its ability to secure sufficient funding to continue operations, to obtain proven and probable reserves, to comply with
industry regulations and obtain permits necessary for development of the Elk Creek Project, as well as environmental risks and
market conditions.
NioCorp
Developments Ltd.
Notes to Consolidated Financial Statements
June 30, 2016
(expressed in thousands of U.S. dollars, unless otherwise stated
)
|
b)
|
Cash and Cash Equivalents
|
Cash and cash equivalents includes
cash on hand, cash in banks, investments in certificates of deposit with original maturities of 90 days or less, and money market
funds.
|
c)
|
Foreign Currency Translation
|
Functional and reporting currency
Items included in the financial
statements of each of the Company’s entities are measured using the currency of the primary economic environment in which
the entity operates (“the functional currency”). The functional currency of the Company is the Canadian Dollar. Effective
July 1, 2015, the Corporation changed the functional currency for Elk Creek Resources Corp., a wholly-owned subsidiary, from the
Canadian Dollar to the U.S. Dollar. This change was made as a greater percentage of expenditures for technical and administrative
services, and raised financings are denominated in U.S. Dollars. No other entities in the Group were affected by this change in
functional currency. This change in judgment has been accounted for prospectively in accordance with Financial Accounting Standards
Board (“FASB”) Accounting Standards Codification (“ASC”) 830.
The reporting currency for these
consolidated financial statements is U.S. Dollars.
Transactions in foreign currency
Transactions made in a currency
other than Canadian Dollars are translated to the functional currency at exchange rates at the dates of the transactions. Monetary
assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at the
exchange rate at that date and non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are
translated at the exchange rates approximating those in effect on the date of the transactions. Foreign currency gains and losses
arising from translation are included in profit or loss.
Translation to reporting currency
The results and financial position
of entities that have a functional currency different from the reporting currency are translated into the reporting currency as
follows:
|
·
|
Assets and liabilities for each statement of financial position presented are translated at the
closing rate at the end of the reporting date.
|
|
·
|
Income and expenses for each statement of income are translated at average exchange rates, unless
this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which
case income and expenses are translated at the rate on the dates of the transactions.
|
|
·
|
All resulting exchange differences are recognized in other comprehensive income.
|
NioCorp
Developments Ltd.
Notes to Consolidated Financial Statements
June 30, 2016
(expressed in thousands of U.S. dollars, unless otherwise stated
)
|
d)
|
Available for Sale Securities
|
Available for sale securities
are recorded at fair value through the statement of operations pursuant to the fair value option permitted by ASC 825, Financial
Instruments.
Equipment is stated at cost less
accumulated depreciation. The residual value, useful life and depreciation method are evaluated every reporting period and changes
to the residual value, estimated useful life or depreciation method resulting from such review are accounted for prospectively.
Depreciation is provided for using the straight line basis at the following rates per annum:
Computer equipment
|
three years
|
Furniture and equipment
|
five years
|
Mineral property acquisition
costs, including indirectly related acquisition costs, are capitalized when incurred. Acquisition costs include cash consideration
and the fair market value of common shares issued as consideration. Properties acquired under option agreements, whereby payments
are made at the sole discretion of the Company, are capitalized as mineral property acquisition costs at such time as the payments
are made. Exploration costs are expensed as incurred. When it is determined that a mining deposit can be economically and legally
extracted or produced based on established proven and probable reserves under SEC Industry Guide 7, development costs related to
such reserves and incurred after such determination will be considered for capitalization. The establishment of proven and probable
reserves is based on results of feasibility studies, which indicate whether a property is economically feasible. Upon commencement
of commercial production, capitalized costs will be amortized over their estimated useful lives or units of production, whichever
is a more reliable measure. Capitalized amounts relating to a property that is abandoned or otherwise considered uneconomic for
the foreseeable future are written off.
Long-lived assets held and used
by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets, the recoverability test is performed
using undiscounted net cash flows related to the long-lived assets. If such assets are considered to be impaired, the impairment
recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to
be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
The Company’s financial
instruments consist of cash, receivables, available for sale securities, accounts payable and accrued liabilities, convertible
debt and the related party loan. It is management’s opinion that the Company is not exposed to significant interest, currency
or credit risks arising from its financial instruments. The fair values of these instruments approximate their carrying value unless
otherwise noted.
|
i)
|
Concentration of Credit Risk
|
The financial instrument which
potentially subjects the Company to credit risk is cash and cash equivalents, The Company holds invests or maintains available
cash primarily in two commercial banks located in Vancouver, British Columbia and Santa Clara, California. As part of its cash
management process, the Company regularly monitors the relative credit standing of these institutions.
NioCorp
Developments Ltd.
Notes to Consolidated Financial Statements
June 30, 2016
(expressed in thousands of U.S. dollars, unless otherwise stated
)
|
j)
|
Asset Retirement Obligation
|
The Company is subject to various
government laws and regulations relating to environmental disturbances caused by exploration and evaluation activities. The estimated
costs associated with environmental remediation obligations are accrued in the period in which the liability is incurred if it
is reasonably estimable or known. Until such time that a project life is established, the Company records the corresponding cost
as an exploration stage expense, and has accrued $85 related to estimated obligations as of June 30, 2016 (2015 - $nil).
Future reclamation and environmental-related
expenditures are difficult to estimate in many circumstances due to the early stage nature of the exploration project, the uncertainties
associated with defining the nature and extent of environmental disturbance, the application of laws and regulations by regulatory
authorities and changes in reclamation or remediation technology. The Company periodically reviews accrued liabilities for such
reclamation and remediation costs as evidence indicating that the liabilities have potentially changed becomes available. Changes
in estimates are reflected in the consolidated statement of operations in the period an estimate is revised.
Income taxes are provided based
upon the liability method of accounting pursuant to ASC 740-10-25, “Income Taxes – Recognition”. Under the approach,
deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets
and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax
assets if management does not believe the Company has met the “more likely than not” standard imposed by ASC 740-10-25-5
to allow recognition of such an asset.
|
l)
|
Basic and Diluted Per Share Disclosure
|
Basic earnings (loss) per share
is computed by dividing net income (loss) by the weighted average number of common shares outstanding. In computing diluted earnings
per share, the weighted average number of shares outstanding is adjusted to reflect the effect of potentially dilutive securities.
Potentially dilutive shares, such as stock options and warrants, are excluded from the calculation when their inclusion would be
anti-dilutive, such as when the exercise price of the instrument exceeds the fair market value of the Company’s common stock
and when a net loss is reported. The dilutive effect of convertible debt securities is reflected in the diluted earnings (loss)
per share calculation using the if-converted method. Conversion of the debt securities is not assumed for purposes of calculating
diluted earnings (loss) per share if the effect is anti-dilutive.
|
m)
|
Stock Based Compensation
|
The Company grants stock options
to directors, officers, and employees. Option terms and vesting conditions are at the discretion of the Board of Directors. The
option exercise price is equal to the closing market price on the Toronto Stock Exchange on the Toronto Stock Exchange on the day
preceding the date of grant.
The Company estimates the fair
value of stock options using the Black-Scholes option pricing model. The Company estimates forfeitures of stock-based awards based
on historical data and periodically adjusts the forfeiture rate. The adjustment of the forfeiture rate is recorded as a cumulative
adjustment in the period the forfeiture estimate is changed.
NioCorp
Developments Ltd.
Notes to Consolidated Financial Statements
June 30, 2016
(expressed in thousands of U.S. dollars, unless otherwise stated
)
|
n)
|
Recent Accounting Standards
|
From time to time, new accounting
pronouncements are issued by the FASB that are adopted by the Company as of the specified effective date. Unless otherwise discussed,
management believes that the impact of recently issued standards did not or will not have a material impact on the Company’s
consolidated financial statements upon adoption.
In February 2016, the FASB issued
Accounting Standard Update (“ASU”) 2016-02, Leases. The standard requires that a lessee recognize on the balance sheet
assets and liabilities for leases with lease terms of more than 12 months. The recognition, measurement, and presentation of expenses
and cash flows arising from a lease have not significantly changed from the previous GAAP. The standard is effective for fiscal
years beginning after December 15, 2018, including interim periods within such fiscal year, with early adoption permitted. The
Company is currently assessing the impact, if any, of implementing this guidance on its consolidated financial position, results
of operations and liquidity.
In November 2015, the FASB issued
ASU 2015-17 which simplifies income tax accounting. The update requires that all deferred tax assets and liabilities be classified
as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. This update is effective
for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, and early adoption is permitted.
The Company elected to early adopt this standard as of July 1, 2014.
In April 2015, the FASB issued
ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. This
update simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from
the corresponding debt liability. The update is effective in fiscal years, including interim periods, beginning after December
15, 2015, and early adoption is permitted. The Company elected to early adopt this standard effective July 1, 2014.
In November 2014, the FASB issued
ASU 2014-16, Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin
to Debt or to Equity. The ASU clarifies how current guidance should be interpreted in evaluating the economic characteristics and
risks of a host contract in a hybrid financial instrument that is issued in the form of a share. Specifically, the amendments clarify
that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation,
in evaluating the nature of a host contract. The ASU is effective for fiscal years and interim periods beginning after December
15, 2015. The Company is currently assessing the impact, if any, of implementing this guidance on its consolidated financial position,
results of operations and liquidity.
In August 2014, the FASB issued
ASU 2014-15, Presentation of Financial Statements – Going Concern. The new standard requires management of public and private
companies to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern and, if
so, disclose that fact. Management will also be required to evaluate and disclose whether its plans alleviate that doubt. The new
standard is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after
December 15, 2016. Adoption of the new guidance is not expected to have a material impact on the financial statement presentation
of the Company.
The Company incurred a loss
of $11,408 for the year ended June 30, 2016 (2015 - $23,115), and has an accumulated deficit of $60,222 as of June 30, 2016. These
factors indicate the existence of a material uncertainty that raises substantial doubt about the Company’s ability to continue
as a going concern.
NioCorp
Developments Ltd.
Notes to Consolidated Financial Statements
June 30, 2016
(expressed in thousands of U.S. dollars, unless otherwise stated
)
The Company’s ability
to continue operations and fund its expenditures is dependent on Management’s ability to secure additional financing. Management
is actively pursuing such additional sources of financing, and while it has been successful in doing so in the past, there can
be no assurance it will be able to do so in the future.
These consolidated financial
statements do not give effect to any adjustments required to realize its assets and discharge its liabilities in other than the
normal course of business and at amounts different from those reflected in the accompanying financial statements.
During the year ended June 30,
2011, the Company completed the acquisition of the Elk Creek property through a share exchange agreement with 0859404 BC Ltd, a
Canadian company, which owned all the issued and outstanding shares of Elk Creek Resources Corp. (“Elk Creek”). The
Company issued 18,990,539 common shares to acquire all of the issued and outstanding shares of 0859404 BC Ltd. and issued 1,034,348
common shares as a finder’s fee with respect to the acquisition. The transaction did not meet the definition of a business
acquisition, as set forth in ASC 805, and therefore was accounted for as a purchase of assets. The acquisition price was based
on the market value of the Company’s common shares on the closing date and total consideration given was C$13,246, including
associated deferred tax impacts, of C$4,736.
The property interests of Elk
Creek consist of a number of prepaid five-year mineral exploration lease agreements, and include a pre-determined buyout for permanent
ownership of the mineral rights. Terms of the agreements require no further significant payments until the conclusion of the prepaid
lease, at which time the Company may negotiate lease extensions or elect to buyout the mineral rights. Certain agreements also
contain provisions to purchase surface rights, and several contain provisions whereby the landowners would retain a 2% NSR. During
the year ended June 30, 2015, the Company executed 5-year extensions to all landholder agreements covering 100% of the mineralized
materials at the Elk Creek Project.
|
6.
|
FLOW THROUGH LIABILITIES
|
The Company issued 8,337,000
common shares to Canadian investors on a flow-through basis for gross proceeds of C$2,501 in November 2010. The Company was required
to incur eligible flow-through expenditures up to November 2011. The Company was short by approximately C$1,470 in meeting this
requirement. Under the subscription agreement with the Canadian investors, the Company has an obligation to indemnify the subscriber
for any taxes that may arise from the Company failing to meet the flow-through expenditure requirements. The Company did not receive
any claims through April 30, 2016 against this accrual, and the accrual was reversed on April 30, 2016 and the Company recorded
a corresponding gain of $587 in ‘other gains’. All claims after May 1, 2016 will be evaluated through the statute of
limitations of the Canada Revenue Agency and expensed as incurred.
|
|
As of June 30,
|
|
|
2016
|
|
2015
|
Convertible Notes
|
|
$
|
475
|
|
|
$
|
—
|
|
Convertible Security
|
|
|
5,991
|
|
|
|
—
|
|
|
|
$
|
6,466
|
|
|
$
|
—
|
|
NioCorp
Developments Ltd.
Notes to Consolidated Financial Statements
June 30, 2016
(expressed in thousands of U.S. dollars, unless otherwise stated
)
Convertible Notes
The Company completed a non-brokered
private placement of unsecured convertible promissory notes (the “Notes”), for gross proceeds of $800 (the “Private
Placement”) in October 2015. The Notes bear interest at a rate of 8%, payable quarterly in arrears, are non-transferable
and have a term of three years from the date of issue. Principal under the Notes is convertible by lenders at any time into, and
payable by the Company in, common shares of the Company at a conversion price of C$0.97 per common share, calculated on conversion
or repayment using the then-current Bank of Canada noon exchange rate. Accrued but unpaid interest on the Notes will be convertible
by lender into, and payable by the Company in, common shares at a price per common share equal to the most recent closing price
of the Company’s common shares prior to the delivery to the Company of a request to convert interest, or the due date of
interest, as applicable, calculated using the then-current Bank of Canada noon exchange rate. Interest, when due, is payable either
in cash or Shares, at the election of the Company.
The conversion feature of the
debentures meets the definition of a derivative liability instrument because the conversion feature is denominated in a currency
other than the Company’s Canadian dollar functional currency and the conversion rate is variable and therefore does not meet
the “fixed-for-fixed” criteria outlined in ASC 815-40-15. As a result, the conversion feature of the debentures is
required to be recorded as a derivative liability recorded at fair value and marked-to-market each period with the changes in fair
value each period being charged or credited to income.
The following table discloses
the components associated with this transaction on the closing date:
|
|
Convertible
Notes
|
Face value of Notes on closing
|
|
$
|
800
|
|
Less:
|
|
|
|
|
Transaction costs
|
|
|
(47
|
)
|
Conversion component
|
|
|
(360
|
)
|
Convertible notes, opening balance
|
|
$
|
393
|
|
The Company incurred transaction
costs of $47, which have been added to the carrying amount of the financial liability and are amortized as part of the effective
interest rate.
Changes in the Notes balance
are comprised of the following:
|
|
Convertible
Notes
|
Notes, balance on closing
|
|
$
|
393
|
|
Accreted interest, net of interest paid
|
|
|
82
|
|
Balance, June 30, 2016
|
|
$
|
475
|
|
The changes in the
derivative liability related to the conversion feature are as follows:
|
|
Derivative
Liability
|
Opening balance
|
|
$
|
360
|
|
Change in fair value of derivative liability
|
|
|
(30
|
)
|
Balance, June 30, 2016
|
|
$
|
330
|
|
NioCorp
Developments Ltd.
Notes to Consolidated Financial Statements
June 30, 2016
(expressed in thousands of U.S. dollars, unless otherwise stated
)
Lind Partners Convertible Security Funding
On December 22, 2015, the Company
closed a definitive convertible security funding agreement (the “Lind Agreement”) with Lind Asset Management IV, LLC
(“Lind”). The Lind Agreement is comprised of a $4,500 principal amount, 10% secured convertible security (the “Convertible
Security”) and 3,125,000 transferable common share purchase warrants (the “Lind Warrants”). The Convertible Security
has a term of two years from its date of issuance, and interest is prepaid and added to its principal amount; accordingly, the
initial face value of the Convertible Security is $5,400, and the yield of the Convertible Security (if held, unconverted, to maturity)
will be 10% per annum, or $900. Each Lind Warrant will entitle the holder to purchase one additional common share (a “Lind
Warrant Share”) at a price of C$0.72 on or before December 22, 2018. Lind can increase the funding under the Convertible
Security by an additional $1,000 during its two-year term. Further, provided certain conditions are met, the Company will have
the right to call an additional $1,000 under the funding agreement.
The Convertible Security is
convertible into common shares of the Company at a conversion price equal to 85% of the volume weighted average trading price of
the common shares (in Canadian dollars) for the five consecutive trading days immediately prior to the date on which the Investor
provides the Company with notice of its intention to convert an amount of the Convertible Security from time to time. The issuance
of the Convertible Security and the Lind Warrants was completed on a non-brokered private placement basis.
The Company has elected to account
for the Convertible Security at fair value. Transaction costs of $214, including a 3% closing fee paid to Lind $135, were expensed
at closing. In addition, the Company recognized $620 in change in financial instrument fair value in the consolidated statement
of operations related to fair value of the Lind Warrants at closing. The fair value of the Lind Warrants was estimated based on
the Black Scholes pricing model using a risk free interest rate of 1.30%, an expected dividend yield of 0%, a volatility of 86.58%,
and an expected life of 3.0 years.
Changes in the Convertible Security
balance are comprised of the following:
|
|
Convertible
Security
|
Opening balance
|
|
$
|
4,500
|
|
Conversions
|
|
|
(638
|
)
|
Change in fair market value
|
|
|
2,129
|
|
Balance, June 30, 2016
|
|
$
|
5,991
|
|
The Convertible Security contains
financial and non-financial covenants customary for a facility of this size and nature, and includes a financial covenant defining
an event of default as all present and future liabilities of the Company or any of its subsidiaries, exclusive of related party
loans, for an amount or amounts exceeding $2,000, and which have not been satisfied on time or within 90 days of invoice, or have
become prematurely payable as a result of its default or breach. This covenant became effective after February 1, 2016 and the
Company was in compliance as of June 30, 2016.
2016 Issuances
NioCorp
Developments Ltd.
Notes to Consolidated Financial Statements
June 30, 2016
(expressed in thousands of U.S. dollars, unless otherwise stated
)
On January 19, 2016, the Company
closed a private placement and issued 9,074,835 units (each a “Unit”) at a price of C$0.57 per Unit, resulting in total
gross proceeds of $3,750. Each Unit consisted of one common share of the Company and one transferable common share purchase warrant
(a “Private Placement Warrant”). Each Private Placement Warrant is exercisable to acquire one additional common share
of the Company for a period of three years at a price of C$0.75 per common share. In addition, the Company issued 75,450 broker
warrants at closing, under the same terms as a Private Placement Warrant. The fair value of the broker warrants of $15 was estimated
based on the Black-Scholes pricing model using a risk free interest rate of 0.75%, an expected dividend yield of 0%, a volatility
of 100.13%, and an expected life of 3.0 years.
2015 Issuances
In February 2015, the Company
announced it had closed a partially brokered and partially non-brokered private placement of 2,914,000 special warrants (“2015
Warrants”) at an issue price of C$0.75 to raise aggregate gross proceeds of $1,722. Each 2015 Warrant is exchangeable at
any time after the closing date of the offering into one unit of the Company; each unit consists of one common share of the Company
and one common share purchase warrant. Each warrant entitles the holder to acquire one additional common share at a price of C$1.00
per share until February 27, 2017. The Company filed a prospectus and obtained the required receipt for that prospectus on March
23, 2015 and qualified the distribution of 2,914,000 2015 Warrants which were deemed exercised on March 30, 2015.
The agent, Mackie Research Capital
Corporation (“MRCC”), received a cash commission equal to 6.5% of the gross proceeds of the brokered portion of the
offering being $112 and 182,910 compensation warrants. The broker warrants are exercisable into common shares at a price C$0.85
per share until February 27, 2017. The fair value of the agent warrants of $79 was estimated based on the Black-Scholes pricing
model using a risk free interest rate of 1.25%, an expected dividend yield of 0%, a volatility of 100.95%, and an expected life
of 2.0 years. Total cash issue costs including agents’ commission, legal and filing fees were $230.
In November 2014 the Company
announced it had closed a partially brokered and partially non-brokered private placement of 19,245,813 special warrants (“2014
Special Warrants”) at an issue price of C$0.55 to raise aggregate gross proceeds of $8,846. Each 2014 Special Warrant is
exchangeable at any time after the closing date of the offering into one unit of the Company; each unit consists of one common
share of the Company and one common share purchase warrant. Each warrant entitles the holder to acquire one additional common share
at a price of C$0.65 per share until November 10, 2016. The Company filed a prospectus and obtained the required receipt for that
prospectus on January 14, 2015 and qualified the distribution of 19,245,813 2014 Special Warrants which were deemed exercised on
January 19, 2015.
The agent, MRCC received a cash
commission equal to 6.5% of the gross proceeds of the brokered portion of the offering and 205,304 non-transferable compensation
units. The broker warrants are exercisable into units having the same terms as the units issued under the Private Placement. Each
unit entitles the agent to purchase a unit at a price of C$0.55 each. Each unit consists of one common share and one warrant exercisable
at a price of C$0.65 per share until November 10, 2016. The fair value of the agent warrants of $108 was estimated based on the
Black Scholes pricing model using a risk free interest rate of 1.25%, an expected dividend yield of 0%, a volatility of 108.9%,
and an expected life of 2.0 years. Total cash issue costs including agents’ commission, legal and filing fees was $300.
The Company has a rolling stock
option plan (the “Plan”) whereby the Company may grant stock options to executive officers and directors, employees,
and consultants at an exercise price to be determined by the board of directors, provided the exercise price is not lower than
the market value on the date of grant. The Plan provides for the issuance of up to 10% of the Company’s issued common shares
as at the date of grant with each stock option having a maximum term of five years. The board of directors has the exclusive power
over the granting of options and their vesting provisions.
NioCorp
Developments Ltd.
Notes to Consolidated Financial Statements
June 30, 2016
(expressed in thousands of U.S. dollars, unless otherwise stated
)
Stock option transactions are
summarized as follows:
|
|
Number of
Options
|
|
Weighted
Average
Exercise Price
(C$)
|
Balance, July 1, 2014
|
|
|
7,060,000
|
|
|
$
|
0.19
|
|
Granted
|
|
|
7,320,000
|
|
|
|
0.76
|
|
Exercised
|
|
|
(6,250,000
|
)
|
|
|
0.20
|
|
Cancelled/expired
|
|
|
(25,000
|
)
|
|
|
0.30
|
|
Balance, June 30, 2015
|
|
|
8,105,000
|
|
|
|
0.69
|
|
Granted
|
|
|
5,875,000
|
|
|
|
0.62
|
|
Exercised
|
|
|
(1,415,000
|
)
|
|
|
0.38
|
|
Cancelled/expired
|
|
|
(1,100,000
|
)
|
|
|
0.75
|
|
Balance June 30, 2016
|
|
|
11,465,000
|
|
|
$
|
0.69
|
|
Number of options currently exercisable
|
|
|
5,765,000
|
|
|
$
|
0.75
|
|
The following table summarizes
the information and assumptions used to determine option costs:
|
|
Year ended June 30,
|
|
|
2016
|
|
2015
|
Fair value per option granted during the period (C$)
|
|
$
|
0.30
|
|
|
$
|
0.42
|
|
Risk-free interest rate
|
|
|
0.75
|
%
|
|
|
1.25
|
%
|
Expected dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
Expected stock price volatility (historical basis)
|
|
|
98.2
|
%
|
|
|
105.6
|
%
|
Expected option life in years
|
|
|
2.15
|
|
|
|
2.15
|
|
The following table summarizes
information about stock options outstanding at June 30, 2016:
Exercise price (C$)
|
|
Expiry date
|
|
Number
outstanding
|
|
Aggregate
Intrinsic
Value
(C$000s)
|
|
Number
exercisable
|
|
Aggregate
Intrinsic
Value
(C$000s)
|
$
|
0.50
|
|
|
May 9, 2017
|
|
|
370,000
|
|
|
|
133
|
|
|
|
370,000
|
|
|
|
133
|
|
$
|
0.62
|
|
|
January 19, 2021
|
|
|
5,575,000
|
|
|
|
1,338
|
|
|
|
—
|
|
|
|
—
|
|
$
|
0.65
|
|
|
May 20, 2017
|
|
|
50,000
|
|
|
|
11
|
|
|
|
50,000
|
|
|
|
11
|
|
$
|
0.65
|
|
|
July 28, 2017
|
|
|
1,250,000
|
|
|
|
263
|
|
|
|
1,250,000
|
|
|
|
263
|
|
$
|
0.76
|
|
|
September 2, 2017
|
|
|
500,000
|
|
|
|
50
|
|
|
|
500,000
|
|
|
|
50
|
|
$
|
0.80
|
|
|
December 22, 2017
|
|
|
3,220,000
|
|
|
|
193
|
|
|
|
3,220,000
|
|
|
|
193
|
|
$
|
0.94
|
|
|
April 28, 2018
|
|
|
500,000
|
|
|
|
—
|
|
|
|
375,000
|
|
|
|
—
|
|
Balance June 30, 2016
|
|
|
|
|
11,465,000
|
|
|
$
|
1,988
|
|
|
|
5,765,000
|
|
|
$
|
650
|
|
The
aggregate intrinsic value in the preceding table represents the total intrinsic value, based on the Company’s closing stock
price of C$0.86 as of June 30, 2016, which would have been received by the option holders had all option holders exercised their
options as of that date. The total number of in-the-money options vested and exercisable as of June 30, 2016 was 5,390,000. The
total intrinsic value of options exercised during the year ended June 30, 2016 was $322.
NioCorp
Developments Ltd.
Notes to Consolidated Financial Statements
June 30, 2016
(expressed in thousands of U.S. dollars, unless otherwise stated
)
As of June 30, 2016, there was
$328 of unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Plan. The cost
is expected to be recognized over a weighted average period of approximately one year.
Warrant transactions are summarized
as follows:
|
|
Warrants
|
|
Weighted
average
exercise price
(C$)
|
|
|
|
|
|
Balance, July 1, 2014
|
|
|
1,064,140
|
|
|
$
|
0.25
|
|
Granted:
|
|
|
|
|
|
|
|
|
Warrants: November financing
|
|
|
19,245,813
|
|
|
|
0.65
|
|
Warrants: March financing
|
|
|
2,914,000
|
|
|
|
1.00
|
|
Agents’ warrants: November financing
|
|
|
205,304
|
|
|
|
0.55
|
|
Agents’ warrants: November financing
|
|
|
205,304
|
|
|
|
0.65
|
|
Agents’ warrants: March financing
|
|
|
182,910
|
|
|
|
0.85
|
|
Agents’ advisory warrants*
|
|
|
750,000
|
|
|
|
0.55
|
|
Agents’ sponsorship warrants**
|
|
|
250,000
|
|
|
|
0.60
|
|
ThyssenKrupp offtake agreement***
|
|
|
8,569,000
|
|
|
|
0.67
|
|
Exercised
|
|
|
(5,125,805
|
)
|
|
|
0.35
|
|
Expired
|
|
|
—
|
|
|
|
—
|
|
Balance, June 30, 2015
|
|
|
28,260,666
|
|
|
|
0.73
|
|
Granted:
|
|
|
|
|
|
|
|
|
Lind Warrants
|
|
|
3,125,000
|
|
|
|
0.72
|
|
January Private Placement
|
|
|
9,074,835
|
|
|
|
0.75
|
|
Broker warrants: December Private Placement
|
|
|
75,450
|
|
|
|
0.75
|
|
Advisory Warrants*
|
|
|
750,000
|
|
|
|
0.65
|
|
Sponsorship warrants**
|
|
|
250,000
|
|
|
|
0.65
|
|
Exercised
|
|
|
(12,549,309
|
)
|
|
|
0.65
|
|
Expired
|
|
|
(7,068,500
|
)
|
|
|
0.67
|
|
Balance June 30, 2016
|
|
|
21,918,142
|
|
|
$
|
0.75
|
|
|
*
|
Pursuant to a financial services advisory agreement with Mackie Research Capital Corporation (“MRCC”)
the Company issued 500,000 advisory warrants on December 4, 2014 and 250,000 advisory warrants on January 14, 2015. Each advisory
warrant entitled MRCC to purchase a unit of the Company at a price of C$0.55 each, on or before December 4, 2016. Each such unit
consisted of one Common Share and one warrant exercisable at a price of C$0.65 per share until December 4, 2016. These units were
exercised during the year ended June 30, 2016, resulting in the granting of these additional 750,000 warrants.
|
|
**
|
Pursuant to a sponsorship agreement between MRCC and the Company in connection with the Company’s
graduation to the Toronto Stock Exchange, the Company issued 250,000 sponsorship warrants on January 14, 2015, entitling MRCC to
purchase units of the Company at C$0.60 per unit until January 14, 2017. Each such unit consisted of one Common Share and one warrant
exercisable at C$0.65 per share until January 14, 2017. These units were exercised during the year ended June 30, 2016, resulting
in the granting of these additional 250,000 warrants.
|
NioCorp
Developments Ltd.
Notes to Consolidated Financial Statements
June 30, 2016
(expressed in thousands of U.S. dollars, unless otherwise stated
)
|
***
|
The Company entered into an offtake agreement with ThyssenKrupp Metallurgical Products GmbH (“ThyssenKrupp”)
whereby ThyssenKrupp will purchase 50% of future ferroniobium production up to 3,750 metric tons from the Elk Creek property for
an initial term of ten years from commencement of commercial production which may be extended by mutual agreement of the parties.
The Agreement presupposes the Company obtaining project financing, obtaining all necessary approvals and constructing a mine at
Elk Creek. Pursuant to the agreement, the Company granted ThyssenKrupp a non-transferable warrant to acquire 8,569,000 common shares
of the Company at an exercise price of C$0.67 per common share, which expired on December 12, 2015.
|
At June 30, 2016 the
Company has outstanding exercisable warrants, as follows:
Number
|
|
Exercise Price (C$)
|
|
Expiry Date
|
6,745,947
|
|
$
|
0.65
|
|
|
November 10, 2016
|
182,910
|
|
|
0.85
|
|
|
February 27, 2017
|
2,714,000
|
|
|
1.00
|
|
|
February 27, 2017
|
3,125,000
|
|
|
0.72
|
|
|
December 22, 2018
|
9,150,285
|
|
|
0.75
|
|
|
January 19, 2019
|
21,918,142
|
|
|
|
|
|
|
On April 20, 2016, the Company
announced an early warrant exercise program (the “Program”) designed to encourage the early exercise of (unlisted)
share purchase warrants exercisable at C$0.65 that otherwise expire on November 10, 2016 (the “November 2016 Warrants”).
The Program and its commencement were approved at a Special Meeting of Shareholders held on Tuesday May 17, 2016.
The warrant exercise program
closed on June 17, 2016, resulting in gross proceeds of C$4,807. A total of 7,394,822 C$0.65 share purchase warrants expiring November
10, 2016 were exercised during the incentive period, representing about 47.6% of all C$0.65 Warrants outstanding and 66% of warrant
holders eligible to participate. Each holder who exercised one warrant during the program received 1.11029 Common Shares, representing
one warrant share and 0.11029 of a Common Share, as the incentive portion. A total of 8,210,394 common shares were issued under
the program, which was previously approved by our shareholders on May 17, 2016. The Company recognized a warrant expense of $535
in other operating expenses in the consolidated statement of operations related to the fair market value of the incentive shares
issued.
|
9.
|
RELATED PARTY TRANSACTIONS AND BALANCES
|
On June 17, 2015, the Company
entered into a one-year loan in the amount of $1,500 with Mark A. Smith, Chief Executive Officer and Executive Chairman of NioCorp.
The one-year term loan bears an interest rate of 10%, is secured by the Company’s assets pursuant to a concurrently executed
general security agreement, and is subject to both a 2.5% establishment fee and 2.5% prepayment fee.
On July 1, 2015, the Company
entered into a non-revolving credit facility agreement (collectively, with the loan above, the “Smith Loans”) in the
amount of $2,000 with Mark Smith and completed a drawdown of $500 on that day, and an additional $100 was drawn under the credit
facility on December 2, 2015. The credit facility bears an interest rate of 10%, is secured by the Company’s assets pursuant
to a general security agreement, and is subject to both a 2.5% establishment fee and 2.5% prepayment fee.
With
the receipt of additional funding proceeds from the December Private Placement and Convertible Security, on January 13, 2016, the
Company repaid $1,100 of the outstanding Smith Loans, representing 100% of amounts drawn down under the credit facility, plus $500
of the amount due under the one-year loan. Interest and establishment fees payable as of December 31, 2015 were also paid. As of
June 30, 2016, accounts payable and accrued liabilities included interest payable to Mr. Smith of $53.
NioCorp
Developments Ltd.
Notes
to Consolidated Financial Statements
June
30, 2016
(expressed in thousands of U.S. dollars, unless otherwise stated
)
Effective June 16, 2016, the Company
and Mr. Smith agreed to extend the due date for the remaining loan amount of $1,000 until June 16, 2017.
|
10.
|
EXPLORATION EXPENDITURES
|
|
|
For the year ended June 30,
|
|
|
|
2016
|
|
|
2015
|
|
Feasibility study and engineering
|
|
$
|
2,671
|
|
|
$
|
5,892
|
|
Field management and other
|
|
|
940
|
|
|
|
1,791
|
|
Drilling
|
|
|
197
|
|
|
|
4,976
|
|
Metallurgical
|
|
|
844
|
|
|
|
4,506
|
|
Geologists and field staff
|
|
|
67
|
|
|
|
886
|
|
Total
|
|
$
|
4,719
|
|
|
$
|
18,051
|
|
Additions to exploration and evaluation
assets during the year ended June 30, 2016 related to ongoing engineering and metallurgical costs incurred in connection with a
feasibility study, as well as land-related payments and general project management costs.
Domestic and foreign components
of loss before income taxes for the years ended June 30, 2016 and 2015 are as follows:
|
|
For the year ended June 30,
|
|
|
|
2016
|
|
|
2015
|
|
Canada
|
|
$
|
4,542
|
|
|
$
|
7,365
|
|
United States
|
|
|
6,866
|
|
|
|
18,505
|
|
Total
|
|
$
|
11,408
|
|
|
$
|
25,870
|
|
Major components of income tax benefit
for the year ended June 30, 2016 and 2015 are as follows:
|
|
For the year ended June 30,
|
|
|
|
2016
|
|
|
2015
|
|
Current taxes
|
|
$
|
–
|
|
|
$
|
–
|
|
Deferred taxes:
|
|
|
|
|
|
|
|
|
Canada
|
|
|
–
|
|
|
|
–
|
|
United States
|
|
|
–
|
|
|
|
(2,755
|
)
|
Total deferred tax benefit
|
|
|
–
|
|
|
|
(2,755
|
)
|
Total income tax benefit
|
|
$
|
–
|
|
|
$
|
(2,755
|
)
|
NioCorp
Developments Ltd.
Notes to Consolidated Financial Statements
June 30, 2016
(expressed
in thousands of U.S. dollars, unless otherwise stated
)
The following table is a
reconciliation of income taxes at statutory rates with the reported taxes:
|
|
For the year ended June 30,
|
|
|
|
2016
|
|
|
2015
|
|
Loss before income taxes
|
|
$
|
11,408
|
|
|
$
|
25,870
|
|
Combined federal and provincial statutory income tax rate
|
|
|
26
|
%
|
|
|
26
|
%
|
Income tax recovery at statutory tax rates
|
|
|
2,966
|
|
|
|
6,726
|
|
Foreign rate differential
|
|
|
893
|
|
|
|
2,405
|
|
Warrant expense
|
|
|
(399
|
)
|
|
|
–
|
|
Share based compensation
|
|
|
(270
|
)
|
|
|
(651
|
)
|
Change in estimates related to prior years
|
|
|
(635
|
)
|
|
|
–
|
|
Change in valuation allowance
|
|
|
(2,169
|
)
|
|
|
(5,725
|
)
|
Other
|
|
|
(386
|
)
|
|
|
–
|
|
Income tax benefit
|
|
$
|
–
|
|
|
$
|
2,755
|
|
Deferred income taxes reflect the
net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. The Company’s net deferred tax asset balances as of June 30, 2016 and 2015
have been revised to reflect the appropriate jurisdictional tax rate applied to Canadian temporary differences. On a consolidated
basis, there was no impact on the Company’s income tax provision for the years ended June 30, 2016 and 2015 and the net deferred
tax balance as of June 30, 2016 and 2015 has not changed due to a full valuation allowance, however, the net deferred tax assets
before valuation allowance as of June 30, 2016 and 2015 decreased by $1,783 and $1,996, respectively. The significant components
of deferred taxes are as follows:
|
|
As of June 30,
|
|
|
|
2016
|
|
|
2015
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
Mineral interest
|
|
$
|
6,555
|
|
|
$
|
4,963
|
|
Net operating losses available for future periods
|
|
|
3,951
|
|
|
|
3,312
|
|
Other
|
|
|
144
|
|
|
|
206
|
|
Total deferred tax assets
|
|
|
10,650
|
|
|
|
8,481
|
|
Valuation allowance
|
|
|
(10,650
|
)
|
|
|
(8,481
|
)
|
Net deferred tax assets
|
|
$
|
–
|
|
|
$
|
–
|
|
The Company establishes a valuation
allowance against future income tax assets if, based on available information, it is more likely than not that all of the assets
will not be realized. The valuation allowance of $10,650 at June 30, 2016 relates mainly to net operating loss carryforwards in
Canada and mineral interest due to deferred exploration expenditures in the United States, where the utilization of such attributes
is not more likely than not. During the year ended June 30, 2015, the Company recognized $2,755 of deferred tax benefit which was
generated during the year to offset existing deferred tax liabilities associated with the acquisition of the Elk Creek mineral
interest.
The Company had cumulative net operating
losses of $13,625 as of June 30, 2016 (2015 - $12,453) for federal income tax purposes and these carryforwards will expire between
2017 and 2035.
The Company had no unrecognized
tax benefits as of June 30, 2016 or 2015. The Company recognizes interest accrued related to unrecognized tax benefits and penalties
in its income tax provision. The Company has not recognized any interest or penalties in the fiscal years presented in these financial
statements. The Company is subject to income tax in the U.S. federal jurisdiction and Canada. Certain years remain subject to examination
but there are currently no ongoing exams in any taxing jurisdictions.
NioCorp
Developments Ltd.
Notes to Consolidated Financial Statements
June 30, 2016
(expressed in thousands of U.S. dollars, unless otherwise stated
)
|
12.
|
FAIR VALUE MEASUREMENTS
|
The Company measures the fair value
of financial assets and liabilities based on US GAAP guidance which defines fair value, establishes a framework for measuring fair
value, and expands disclosures about fair value measurements.
The Company classifies financial
assets and liabilities as held-for-trading, available-for-sale, held-to-maturity, loans and receivables or other financial liabilities
depending on their nature. Financial assets and financial liabilities are recognized at fair value on their initial recognition.
Financial assets and liabilities
classified as held-for-trading are measured at fair value, with gains and losses recognized in net income. Financial assets classified
as held-to-maturity, loans and receivables, and financial liabilities other than those classified as held-for-trading are measured
at amortized cost, using the effective interest method of amortization. Financial assets classified as available-for-sale are measured
at fair value, with unrealized gains and losses being recognized in income.
Financial instruments, including
receivables, accounts payable and accrued liabilities, and related party loans are carried at amortized cost, which management
believes approximates fair value due to the short term nature of these instruments.
The following table presents information
about the assets and liabilities that are measured at fair value on a recurring basis as at June 30, 2016 and 2015, and indicates
the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general, fair values
determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical instruments. Fair values determined
by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates, and yield curves. Fair values
determined by Level 3 inputs are unobservable data points for the financial instrument, and included situations where there is
little, if any, market activity for the instrument:
|
|
As of June 30, 2016
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
4,412
|
|
|
$
|
4,412
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Available for sale securities
|
|
|
32
|
|
|
|
32
|
|
|
|
–
|
|
|
|
–
|
|
Total
|
|
$
|
4,444
|
|
|
$
|
4,444
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible debt
|
|
$
|
5,991
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
5,991
|
|
Derivative liability, convertible debt
|
|
|
330
|
|
|
|
–
|
|
|
|
–
|
|
|
|
330
|
|
|
|
$
|
6,321
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
6,321
|
|
|
|
As of June 30, 2015
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
753
|
|
|
$
|
753
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Available for sale securities
|
|
|
46
|
|
|
|
46
|
|
|
|
–
|
|
|
|
–
|
|
Total
|
|
$
|
799
|
|
|
$
|
799
|
|
|
$
|
–
|
|
|
$
|
–
|
|
The Company measures the fair market
value of the Level 3 components using the Black-Scholes model and discounted cash flows, as appropriate. These models are prepared
by a third party and take into account management’s best estimate of the conversion price of the stock, an estimate of the
expected time to conversion, an estimate of the stock’s volatility, and the risk-free rate of return expected for an instrument
with a term equal to the duration of the convertible debt.
NioCorp
Developments Ltd.
Notes to Consolidated Financial Statements
June 30, 2016
(expressed in thousands of U.S. dollars, unless otherwise stated
)
The significant unobservable
valuation inputs for the Convertible Debt includes an expected return of 51.06%. A 15% decrease (increase) in the expected return
would result in an increase (decrease) to fair value of $94, or approximately 2%.
The derivative liability was valued
using a Black-Scholes pricing model with the following inputs:
Risk-free interest rate
|
|
|
1.25
|
%
|
Expected dividend yield
|
|
|
0
|
%
|
Expected stock price volatility
|
|
|
88.63
|
%
|
Expected option life in years
|
|
|
2.50
|
%
|
The following table sets forth a
reconciliation of changes in the fair value of the Company’s convertible debt components classified as Level 3 in the fair
value hierarchy:
|
|
As of June 30,
|
|
|
|
2016
|
|
|
2015
|
|
Beginning balance
|
|
$
|
|
|
|
$
|
–
|
|
Convertible securities closings
|
|
|
4,860
|
|
|
|
–
|
|
Conversions to equity
|
|
|
(638
|
)
|
|
|
–
|
|
Realized and unrealized losses
|
|
|
2,099
|
|
|
|
–
|
|
Ending balance
|
|
$
|
6,321
|
|
|
$
|
–
|
|
|
13.
|
COMMITMENTS AND CONTINGENCIES
|
Other Exploration Properties
The Company held an option to acquire
a 100% interest in certain claim units located in the Kenora Mining Division, Ontario, referred to as the Tait Lake property, and
had previously written the exploration asset down to $nil. In April 2015, the Company sold the Tait Lake option for a cash payment
of $9.
The Company, through its wholly-owned
subsidiary, Northeast Minerals, held exploration rights for the Jungle Well and Laverton projects in Australia (the “Exploration
Rights”). On July 2, 2015, the Company entered into an agreement to sell its investment in Northeast Minerals to a third
party. Assets of Northeast Minerals included the Explorations Rights, with a nil book value, and 3,750,000 shares of Victory Mines
Limited (“Victory”), an Australian public entity. The book value of the Victory shares was written down to one dollar
at June 30, 2015 to reflect the estimated market value. No other gain or loss was incurred related to the sale of Northeast Minerals.
NioCorp has the following land,
office, facility and equipment lease commitments in place as of June 30, 2016:
|
|
Payments due by period
|
|
|
|
Total
|
|
|
Less than 1
year
|
|
|
1-3 years
|
|
|
4-5 years
|
|
|
After 5
years
|
|
Debt
|
|
$
|
7,510
|
|
|
$
|
1,214
|
|
|
$
|
6,296
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Operating leases
|
|
|
349
|
|
|
|
207
|
|
|
|
123
|
|
|
|
19
|
|
|
|
–
|
|
Total contractual obligations
|
|
$
|
7,859
|
|
|
$
|
1,421
|
|
|
$
|
6,419
|
|
|
$
|
19
|
|
|
$
|
–
|
|
NioCorp Developments Ltd.
Unaudited Consolidated Financial Statements
March 31, 2017
NioCorp Developments Ltd.
Condensed Consolidated Balance Sheets
(expressed in thousands of U.S. dollars, except share data) (unaudited)
|
|
|
|
|
As of
|
|
|
|
Note
|
|
|
March 31,
2017
|
|
|
June 30,
2016
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
$
|
1,870
|
|
|
$
|
4,412
|
|
Restricted cash
|
|
|
4
|
|
|
|
265
|
|
|
|
-
|
|
Receivables
|
|
|
|
|
|
|
5
|
|
|
|
5
|
|
Prepaid expenses
|
|
|
|
|
|
|
63
|
|
|
|
101
|
|
Total current assets
|
|
|
|
|
|
|
2,203
|
|
|
|
4,518
|
|
Non-current
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
|
|
|
|
64
|
|
|
|
65
|
|
Available for sale securities at fair value
|
|
|
|
|
|
|
26
|
|
|
|
32
|
|
Equipment
|
|
|
|
|
|
|
8
|
|
|
|
14
|
|
Mineral interests
|
|
|
|
|
|
|
10,617
|
|
|
|
10,617
|
|
Total assets
|
|
|
|
|
|
$
|
12,918
|
|
|
$
|
15,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
|
|
|
$
|
1,904
|
|
|
$
|
1,256
|
|
Total current liabilities
|
|
|
|
|
|
|
1,904
|
|
|
|
1,256
|
|
Related party loans
|
|
|
7
|
|
|
|
1,175
|
|
|
|
1,000
|
|
Convertible debt
|
|
|
5
|
|
|
|
5,502
|
|
|
|
6,466
|
|
Derivative liability, convertible debt
|
|
|
5
|
|
|
|
115
|
|
|
|
330
|
|
Total liabilities
|
|
|
|
|
|
|
8,696
|
|
|
|
9,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, unlimited shares authorized; shares outstanding: 195,428,961 and 180,467,990, respectively
|
|
|
6
|
|
|
|
66,139
|
|
|
|
58,401
|
|
Additional paid-in capital
|
|
|
|
|
|
|
9,711
|
|
|
|
8,630
|
|
Accumulated deficit
|
|
|
|
|
|
|
(71,153
|
)
|
|
|
(60,222
|
)
|
Accumulated other comprehensive loss
|
|
|
|
|
|
|
(475
|
)
|
|
|
(615
|
)
|
Total equity
|
|
|
|
|
|
|
4,222
|
|
|
|
6,194
|
|
Total liabilities and equity
|
|
|
|
|
|
$
|
12,918
|
|
|
$
|
15,246
|
|
The accompanying notes are an integral part
of these condensed consolidated financial statements
NioCorp Developments Ltd.
Condensed Consolidated Statements of Operations and Comprehensive
Loss
(expressed in thousands of U.S. dollars, except share and per share
data) (unaudited)
|
|
|
|
|
For the three months ended
March 31,
|
|
|
For the nine months ended
March 31,
|
|
|
|
Note
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
|
|
|
|
$
|
-
|
|
|
$
|
27
|
|
|
$
|
1
|
|
|
$
|
158
|
|
Depreciation
|
|
|
|
|
|
|
3
|
|
|
|
3
|
|
|
|
7
|
|
|
|
7
|
|
Employee related costs
|
|
|
|
|
|
|
578
|
|
|
|
732
|
|
|
|
1,614
|
|
|
|
1,252
|
|
Finance costs
|
|
|
|
|
|
|
4
|
|
|
|
(38
|
)
|
|
|
4
|
|
|
|
240
|
|
Professional fees
|
|
|
|
|
|
|
133
|
|
|
|
151
|
|
|
|
745
|
|
|
|
273
|
|
Exploration expenditures
|
|
|
8
|
|
|
|
2,761
|
|
|
|
566
|
|
|
|
7,128
|
|
|
|
2,962
|
|
Other operating expenses
|
|
|
|
|
|
|
596
|
|
|
|
442
|
|
|
|
906
|
|
|
|
933
|
|
Total operating expenses
|
|
|
|
|
|
|
4,075
|
|
|
|
1,883
|
|
|
|
10,405
|
|
|
|
5,825
|
|
Change in financial instrument fair value
|
|
|
5
|
|
|
|
524
|
|
|
|
1,132
|
|
|
|
189
|
|
|
|
2,501
|
|
Foreign exchange (gain) loss
|
|
|
|
|
|
|
(80
|
)
|
|
|
(686
|
)
|
|
|
113
|
|
|
|
(489
|
)
|
Interest expense
|
|
|
|
|
|
|
78
|
|
|
|
62
|
|
|
|
218
|
|
|
|
203
|
|
Loss on available for sale securities
|
|
|
|
|
|
|
12
|
|
|
|
19
|
|
|
|
6
|
|
|
|
13
|
|
Loss before income taxes
|
|
|
|
|
|
|
4,609
|
|
|
$
|
2,410
|
|
|
|
10,931
|
|
|
|
8,053
|
|
Income tax benefit
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
Net loss
|
|
|
|
|
|
$
|
4,609
|
|
|
$
|
2,410
|
|
|
$
|
10,931
|
|
|
$
|
8,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
$
|
4,609
|
|
|
$
|
2,410
|
|
|
$
|
10,931
|
|
|
$
|
8,053
|
|
Other comprehensive (gain) loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reporting currency translation
|
|
|
|
|
|
|
91
|
|
|
|
987
|
|
|
|
(140
|
)
|
|
|
36
|
|
Total comprehensive loss
|
|
|
|
|
|
$
|
4,700
|
|
|
$
|
3,397
|
|
|
$
|
10,791
|
|
|
$
|
8,089
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common share, basic
|
|
|
|
|
|
$
|
0.02
|
|
|
$
|
0.01
|
|
|
$
|
0.06
|
|
|
$
|
0.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
195,081,408
|
|
|
|
167,605,398
|
|
|
|
184,880,012
|
|
|
|
161,140,606
|
|
The accompanying notes are an integral part
of these condensed consolidated financial statements
NioCorp Developments Ltd.
Condensed Consolidated Statements of Cash Flows
(expressed in thousands of U.S. dollars) (unaudited)
|
|
For the nine months ended
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Total loss for the period
|
|
$
|
(10,931
|
)
|
|
$
|
(8,053
|
)
|
Non-cash elements included in net loss:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
7
|
|
|
|
7
|
|
Change in financial instrument fair value
|
|
|
189
|
|
|
|
2,501
|
|
Unrealized loss on available-for-sale investments
|
|
|
6
|
|
|
|
13
|
|
Accretion of convertible debt
|
|
|
85
|
|
|
|
57
|
|
Foreign exchange (gain) loss
|
|
|
157
|
|
|
|
(236
|
)
|
Share-based compensation
|
|
|
862
|
|
|
|
643
|
|
|
|
|
(9,625
|
)
|
|
|
(5,068
|
)
|
Change in working capital items:
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
-
|
|
|
|
8
|
|
Prepaid expenses
|
|
|
37
|
|
|
|
147
|
|
Accounts payable and accrued liabilities
|
|
|
571
|
|
|
|
(4,155
|
)
|
Net cash used in operating activities
|
|
|
(9,017
|
)
|
|
|
(9,068
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Restricted cash funding
|
|
|
(265
|
)
|
|
|
-
|
|
Acquisition of equipment
|
|
|
-
|
|
|
|
(4
|
)
|
Net cash used in investing activities
|
|
|
(265
|
)
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Proceeds from issuance of capital stock
|
|
|
5,673
|
|
|
|
5,773
|
|
Share issue costs
|
|
|
(66
|
)
|
|
|
(95
|
)
|
Issuance of convertible debt, net of issuance costs
|
|
|
1,000
|
|
|
|
5,060
|
|
Related party debt draws
|
|
|
175
|
|
|
|
600
|
|
Related party debt repayment
|
|
|
-
|
|
|
|
(1,100
|
)
|
Net cash provided by financing activities
|
|
|
6,782
|
|
|
|
10,238
|
|
Exchange rate effect on cash
|
|
|
(42
|
)
|
|
|
228
|
|
Change in cash during the period
|
|
|
(2,542
|
)
|
|
|
1,394
|
|
Cash, beginning of period
|
|
|
4,412
|
|
|
|
753
|
|
Cash, end of period
|
|
$
|
1,870
|
|
|
$
|
2,147
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
Amounts paid for interest
|
|
$
|
48
|
|
|
$
|
128
|
|
Amounts paid for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
Non-cash financing transaction
|
|
$
|
2,212
|
|
|
$
|
-
|
|
The accompanying notes are an integral part
of these condensed consolidated financial statements
NioCorp Developments Ltd.
Condensed Consolidated Statements of Shareholders’ Equity
(expressed in thousands of U.S. dollars, except share data) (unaudited)
|
|
Common
Shares
Outstanding
|
|
|
Common
Stock
|
|
|
Additional
Paid-in
Capital
|
|
|
Deficit
|
|
|
Accumulated
Other
Comprehensive
Loss
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 1, 2015
|
|
|
156,420,334
|
|
|
$
|
47,617
|
|
|
$
|
7,250
|
|
|
$
|
(48,814
|
)
|
|
$
|
(1,042
|
)
|
|
$
|
5,011
|
|
Exercise of warrants
|
|
|
12,549,309
|
|
|
|
5,838
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,838
|
|
Exercise of options
|
|
|
1,415,000
|
|
|
|
405
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
405
|
|
Fair value of broker warrants granted
|
|
|
-
|
|
|
|
-
|
|
|
|
15
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15
|
|
Fair value of Lind Warrants granted
|
|
|
-
|
|
|
|
-
|
|
|
|
620
|
|
|
|
-
|
|
|
|
-
|
|
|
|
620
|
|
Private placement - January 2016
|
|
|
9,074,835
|
|
|
|
3,750
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,750
|
|
Debt conversions
|
|
|
1,008,512
|
|
|
|
638
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
638
|
|
Share issuance costs
|
|
|
-
|
|
|
|
(151
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(151
|
)
|
Fair value of stock options exercised
|
|
|
-
|
|
|
|
304
|
|
|
|
(304
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Share-based payments
|
|
|
-
|
|
|
|
-
|
|
|
|
1,049
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,049
|
|
Reporting currency presentation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
427
|
|
|
|
427
|
|
Loss for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(11,408
|
)
|
|
|
-
|
|
|
|
(11,408
|
)
|
Balance, June 30, 2016
|
|
|
180,467,990
|
|
|
$
|
58,401
|
|
|
$
|
8,630
|
|
|
$
|
(60,222
|
)
|
|
$
|
(615
|
)
|
|
$
|
6,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of warrants
|
|
|
3,447,137
|
|
|
|
1,675
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,675
|
|
Exercise of options
|
|
|
150,000
|
|
|
|
70
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
70
|
|
Fair value of broker warrants granted
|
|
|
-
|
|
|
|
-
|
|
|
|
20
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20
|
|
Fair value of Lind warrants granted
|
|
|
-
|
|
|
|
-
|
|
|
|
233
|
|
|
|
-
|
|
|
|
-
|
|
|
|
233
|
|
Private placements - February 2017
|
|
|
7,364,789
|
|
|
|
3,927
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,927
|
|
Debt conversions
|
|
|
3,999,045
|
|
|
|
2,212
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,212
|
|
Share issuance costs
|
|
|
-
|
|
|
|
(180
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(180
|
)
|
Fair value of stock options exercised
|
|
|
-
|
|
|
|
34
|
|
|
|
(34
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Share-based payments
|
|
|
-
|
|
|
|
-
|
|
|
|
862
|
|
|
|
-
|
|
|
|
-
|
|
|
|
862
|
|
Reporting currency presentation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
140
|
|
|
|
140
|
|
Loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(10,931
|
)
|
|
|
-
|
|
|
|
(10,931
|
)
|
Balance, March 31, 2017
|
|
|
195,428,961
|
|
|
$
|
66,139
|
|
|
$
|
9,711
|
|
|
$
|
(71,153
|
)
|
|
$
|
(475
|
)
|
|
$
|
4,222
|
|
The accompanying
notes are an integral part of these condensed consolidated financial statements
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial
Statements
March 31, 2017
(expressed in thousands of U.S. dollars, unless
otherwise stated) (unaudited)
|
1.
|
DESCRIPTION OF BUSINESS
|
NioCorp Developments Ltd. (the “Company”)
was incorporated on February 27, 1987 under the laws of the Province of British Columbia and currently operates in one reportable
operating segment consisting of exploration and development of mineral deposits in North America, specifically, the Elk Creek Niobium/Scandium/Titanium
property (the “Elk Creek Project”) located in southeastern Nebraska.
These financial statements have been prepared
on a going concern basis that contemplates the realization of assets and discharge of liabilities at their carrying values in the
normal course of business for the foreseeable future. These financial statements do not reflect any adjustments that may be necessary
if the Company is unable to continue as a going concern.
The Company currently earns no operating revenues
and will require additional capital in order to advance the Elk Creek Project. The Company’s ability to continue as a going
concern is uncertain and is dependent upon the generation of profits from mineral properties, obtaining additional financing, and
maintaining continued support from its shareholders and creditors.
|
a)
|
Basis of Preparation and Consolidation
|
The accompanying unaudited interim
condensed consolidated interim financial statements have been prepared in accordance with generally accepted accounting principles
of the United States of America (“US GAAP”) and the rules and regulations of the Securities and Exchange Commission
(“SEC”). The interim condensed consolidated financial statements include the consolidated accounts of the Company and
its wholly-owned subsidiaries with all significant intercompany transactions eliminated. The accounting policies followed in preparing
these consolidated interim financial statements are those used by the Company as set out in the audited consolidated financial
statements for the year ended June 30, 2016.
In the opinion of Management, all adjustments
considered necessary (including reclassifications and normal recurring adjustments) to present fairly the financial position, results
of operations and cash flows at March 31, 2017, and for all periods presented have been included in these interim condensed consolidated
financial statements. Certain information and footnote disclosures normally included in the consolidated financial statements prepared
in accordance with US GAAP have been condensed or omitted pursuant to such SEC rules and regulations. These interim condensed consolidated
financial statements should be read in conjunction with the audited consolidated financial statements for the year ended June 30,
2016. The interim results are not necessarily indicative of results for the full year ending June 30, 2017, or future operating
periods.
|
b)
|
Recent Accounting Standards
|
In May 2014, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2014-09, Revenue from Contracts with
Customers (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements of FASB Accounting Standards
Codification (“ASC”) Topic 605, Revenue Recognition, and most industry-specific guidance. ASU 2014-09 requires entities
to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled to in exchange for those goods or services. This ASU provides alternative
methods of retrospective adoption and is effective for fiscal years, and interim periods within those years, beginning after December
15, 2017. Early adoption would be permitted but not before annual periods beginning after December 15, 2016. The Company is currently
assessing the potential impact of adopting this ASU on its consolidated financial statements and related disclosures.
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial
Statements
March 31, 2017
(expressed in thousands of U.S. dollars, unless
otherwise stated) (unaudited)
In August 2014, the FASB issued ASU
2014-15, Presentation of Financial Statements – Going Concern. The new standard requires management of public and private
companies to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern and, if
so, to disclose that fact. Management will also be required to evaluate and disclose whether its plans alleviate that doubt. The
new standard is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning
after December 15, 2016. The Company adopted this standard during the three-month period ended December 31, 2016, and the adoption
of this standard had no material impacts on our financial statements.
In February 2016, the FASB issued ASU
2016-02, Leases. The standard requires that a lessee recognize on the balance sheet assets and liabilities for leases with lease
terms of more than twelve months. The recognition, measurement, and presentation of expenses and cash flows arising from a lease
have not significantly changed from the previous GAAP. The standard is effective for fiscal years beginning after December 15,
2018, including interim periods within such fiscal year, with early adoption permitted. The Company is currently assessing the
impact, if any, of implementing this guidance on its consolidated financial position, results of operations, and liquidity.
In November 2016, the FASB issued ASU
2016-18, Statement of Cash Flows (Topic 230), Restricted Cash. The standard provides guidance on the presentation of restricted
cash and restricted cash equivalents in the statement of cash flows. Restricted cash and restricted cash equivalents should now
be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statements
of cash flows. The amendments of this ASU are effective for reporting periods beginning after December 15, 2017, with early adoption
permitted. Other than the revised statement of cash flows presentation of restricted cash (if any), the adoption of this new guidance
is not expected to have an impact on our financial statements.
The preparation of consolidated financial
statements in conformity with US GAAP requires Management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to
the deferred income tax asset valuations, convertible debt valuations and share-based compensation. The Company bases its estimates
and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the
circumstances, the results of which form the basis for making judgments about the other sources. The actual results experienced
by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences
between estimates and the actual results, future results of operations will be affected.
The Company incurred a loss of $10,931 for
the nine months ended March 31, 2017 (2016 - $8,053), and has an accumulated deficit of $71,153 as of March 31, 2017. These factors
indicate the existence of a material uncertainty that raises substantial doubt about the Company’s ability to continue as
a going concern.
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial
Statements
March 31, 2017
(expressed in thousands of U.S. dollars, unless
otherwise stated) (unaudited)
The Company’s ability to continue operations
and fund its expenditures is dependent on Management’s ability to secure additional financing. Management is actively pursuing
such additional sources of financing, and while it has been successful in doing so in the past, there can be no assurance it will
be able to do so in the future. These consolidated financial statements do not give effect to any adjustments required to realize
its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected
in the accompanying financial statements.
Restricted cash represents amounts held in
escrow to secure payment of work related to the Company’s Elk Creek Project feasibility study. Under the terms of the escrow
agreement, the balance of $265 will be drawn against outstanding accounts payable once certain project milestones are met.
|
|
As of
|
|
|
|
March 31,
2017
|
|
|
June 30,
2016
|
|
Convertible Security
|
|
$
|
4,943
|
|
|
$
|
5,991
|
|
Convertible Notes
|
|
|
559
|
|
|
|
475
|
|
|
|
$
|
5,502
|
|
|
$
|
6,466
|
|
Convertible Security Funding
Changes in the Lind Partners Asset Management
IV, LLC (“Lind”) convertible security (the “Convertible Security”) balance are comprised of the following:
|
|
Convertible Security
|
|
Balance, June 30, 2016
|
|
$
|
5,991
|
|
Additional debt drawdown
|
|
|
1,000
|
|
Conversions, at fair value
|
|
|
(2,212
|
)
|
Change in fair market value
|
|
|
164
|
|
Balance, March 31, 2017
|
|
$
|
4,943
|
|
Further to the terms of the Convertible Security,
upon satisfaction of certain conditions, including but not limited to a minimum draw down amount by Lind under the Convertible
Security, a minimum market capitalization for the Company, and a minimum amount of cash on the Company’s balance sheet, the
Company had the right to call an additional $1,000 under the Convertible Security (a “First Tranche Increase”). On
February 14, 2017, upon satisfaction of the conditions for the First Tranche Increase, the Company provided notice to Lind to demand
the advancement of an additional $1,000 in funding under the Convertible Security pursuant to its right to call. This amount was
funded by Lind on March 31, 2017, resulting in an increase in the face amount of the Convertible Security increased by $1,200 ($1,000
in funding and $200 in implied interest). The maturity date of the First Tranche increase is March 31, 2019. Consistent with the
accounting method utilized for the original Convertible Security drawdowns, the First Tranche Increase has been accounted for at
fair value.
In connection with the First Tranche Increase
closing, the Company issued Lind 890,670 common share purchase warrants of the Company (the “First Tranche Warrants”).
The First Tranche Warrants have a term of 36 months from issuance, and an exercise price $C0.90. The fair value of the First Tranche
Warrants was estimated based on the Black Scholes pricing model using a risk-free interest rate of 1.30%, an expected dividend
yield of 0%, a volatility of 81%, and an expected life of 3.0 years. The Company recognized $234 in change in financial instrument
fair value in the consolidated statement of operations related to fair value of the First Tranche Warrants at closing.
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial
Statements
March 31, 2017
(expressed in thousands of U.S. dollars, unless
otherwise stated) (unaudited)
On March 20, 2017, the Company and Lind entered
into an amendment to extend the term of the Convertible Security from 24 months to 30 months, such that the due date has been extended
to June 17, 2018.
The Convertible Security is convertible into
Common Shares of the Company at a conversion price equal to 85% of the volume weighted average trading price of the Common Shares
(in Canadian dollars) on the TSX for the five consecutive trading days immediately prior to the date on which the Lind provides
the Company with notice of its intention to convert an amount of the Convertible Security from time to time. During the nine-month
period ended March 31, 2017, $1,850 face value of the Convertible Security was converted into 3,999,045 Common Shares.
The Convertible Security contains financial
and non-financial covenants customary for a facility of this size and nature, and includes a financial covenant defining an event
of default as all present and future liabilities of the Company or any of its subsidiaries, exclusive of related party loans, for
an amount or amounts exceeding $2,000, and which have not been satisfied on time or within 90 days of invoice, or have become prematurely
payable as a result of its default or breach. The Company was in compliance as of March 31, 2017.
Convertible Notes
Changes in the Company’s outstanding
convertible promissory notes (the “Convertible Notes”) balance are comprised of the following:
|
|
Convertible Notes
|
|
Balance, June 30, 2016
|
|
$
|
475
|
|
Accreted interest, net of interest paid
|
|
|
84
|
|
Balance, March 31, 2017
|
|
$
|
559
|
|
The changes in the derivative liability related
to the conversion feature are as follows:
|
|
Derivative Liability
|
|
Balance, June 30, 2016
|
|
$
|
330
|
|
Change in fair value of derivative liability
|
|
|
(215
|
)
|
Balance, March 31, 2017
|
|
$
|
115
|
|
On February 14, 2017, the Company completed
the first tranche closing (the “First Tranche Closing”) of a non-brokered private placement of units (each a “Unit”)
announced January 27, January 30, February 7, and February 10, 2017 (the “February 2017 Offering”). The First Tranche
Closing consisted of the issuance of 3,860,800 Units at a price of C$0.70 per Unit, for gross proceeds of C$2.7 million. Each Unit
consists of one Common Share and one transferable Common Share purchase warrant (each whole such warrant a “Warrant”),
with each Warrant entitling the holder thereof to acquire one additional Common Share at a price of C$0.85 for a period of 36 months
from their date of issuance.
On February 28, 2017, the Company completed
the second and final tranche closing (the “Final Closing”) of the February 2017 Offering. The Final Closing consisted
of the issuance of 3,503,989 units including 2,964,682 units dated February 21, 2017, and 539,307 units dated February 28, 2017
(collectively, the “Final Closing Units”), at a price of C$0.70 per Unit, for gross aggregate proceeds of C$2.5 million.
Each Final Closing Unit consists of one Common Share and one transferable Common Share purchase warrant (a “Warrant”),
with each Warrant entitling the holder thereof to acquire one additional Common Share at a price of C$0.85 for a period of three
years from Unit issuance. The Company paid cash commissions of C$88 and issued 78,342 broker warrants (having the same terms as
the Warrants) in connection with the Final Closing to brokers outside of the United States. The broker warrants were valued at
C$26 using a risk-free rate of 0.75%, expected volatility of 81.27% and expected life of three years.
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial
Statements
March 31, 2017
(expressed in thousands of U.S. dollars, unless
otherwise stated) (unaudited)
The Company has a rolling stock option
plan (the “Plan”) whereby the Company may grant stock options to executive officers and directors, employees, and consultants
at an exercise price to be determined by the board of directors, provided the exercise price is not lower than the greater of (i)
the last closing price of the Company’s common shares on the TSX and (ii) the volume weighted average closing price of the
Company’s common shares on the TSX for the five days immediately prior to the date of grant. The Plan provides for the issuance
of up to 10% of the Company’s issued Common Shares as at the date of grant with each stock option having a maximum term of
ten years. The board of directors has the exclusive power over the granting of options and their vesting provisions.
Stock option transactions are summarized as
follows:
|
|
Number of
Options
|
|
|
Weighted
Average
Exercise Price
(C$)
|
|
Balance, June 30, 2016
|
|
|
11,465,000
|
|
|
$
|
0.69
|
|
Granted
|
|
|
6,360,000
|
|
|
|
0.78
|
|
Exercised
|
|
|
(150,000
|
)
|
|
|
0.62
|
|
Cancelled/expired
|
|
|
(650,000
|
)
|
|
|
0.76
|
|
Balance, March 31, 2017
|
|
|
17,025,000
|
|
|
$
|
0.72
|
|
The following table summarizes the information
and assumptions used to determine option costs for the nine-month period ended March 31, 2017:
Fair value per option granted during the period (C$)
|
|
$
|
0.42
|
|
Risk-free interest rate
|
|
|
0.75
|
%
|
Expected dividend yield
|
|
|
0
|
%
|
Expected stock price volatility (historical basis)
|
|
|
92.93
|
%
|
Expected option life in years
|
|
|
2.15
|
|
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial
Statements
March 31, 2017
(expressed in thousands of U.S. dollars, unless
otherwise stated) (unaudited)
The following table summarizes information
about stock options outstanding at March 31, 2017:
Exercise
price (C$)
|
|
|
Expiry date
|
|
Number
outstanding
|
|
|
Aggregate
Intrinsic Value
(C$000s)
|
|
|
Number
exercisable
|
|
|
Aggregate
Intrinsic
Value
(C$000s)
|
|
$
|
0.50
|
|
|
May 9, 2017
|
|
|
370,000
|
|
|
$
|
89
|
|
|
|
370,000
|
|
|
$
|
89
|
|
$
|
0.62
|
|
|
January 19, 2021
|
|
|
5,275,000
|
|
|
|
633
|
|
|
|
3,956,250
|
|
|
|
475
|
|
$
|
0.65
|
|
|
May 20, 2017
|
|
|
50,000
|
|
|
|
4
|
|
|
|
50,000
|
|
|
|
4
|
|
$
|
0.65
|
|
|
July 28, 2017
|
|
|
1,250,000
|
|
|
|
113
|
|
|
|
1,250,000
|
|
|
|
113
|
|
$
|
0.76
|
|
|
September 2, 2017
|
|
|
500,000
|
|
|
|
-
|
|
|
|
500,000
|
|
|
|
-
|
|
$
|
0.76
|
|
|
March 7, 2022
|
|
|
5,650,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
$
|
0.80
|
|
|
December 22, 2017
|
|
|
2,720,000
|
|
|
|
-
|
|
|
|
2,720,000
|
|
|
|
-
|
|
$
|
0.94
|
|
|
April 28, 2018
|
|
|
500,000
|
|
|
|
-
|
|
|
|
500,000
|
|
|
|
-
|
|
$
|
0.96
|
|
|
July 21, 2021
|
|
|
710,000
|
|
|
|
-
|
|
|
|
355,000
|
|
|
|
-
|
|
Balance March 31, 2017
|
|
|
17,025,000
|
|
|
$
|
839
|
|
|
|
9,701,250
|
|
|
$
|
681
|
|
The aggregate intrinsic value in the preceding
table represents the total intrinsic value, based on the Company’s closing stock price of C$0.74 as of March 31, 2017, which
would have been received by the option holders had all option holders exercised their options as of that date. In-the-money options
vested and exercisable as of March 31, 2017, totaled 5,626,250.
As March 31, 2017, there was $1,436 of unrecognized
compensation cost related to unvested share-based compensation arrangements granted under the Plan. The cost is expected to be
recognized over a remaining weighted average period of approximately 1.4 years.
Warrant transactions
are summarized as follows:
|
|
Warrants
|
|
|
Weighted
Average
Exercise Price
(C$)
|
|
Balance June 30, 2016
|
|
|
22,733,685
|
|
|
$
|
0.74
|
|
Granted
|
|
|
8,333,801
|
|
|
|
0.86
|
|
Exercised
|
|
|
(3,447,137
|
)
|
|
|
0.65
|
|
Expired
|
|
|
(7,011,263
|
)
|
|
|
0.79
|
|
Balance, March 31, 2017
|
|
|
20,609,086
|
|
|
$
|
0.79
|
|
As discussed above under Note 6a, the Company
granted 7,364,789 warrants and 78,342 broker warrants in conjunction with the February 2017 Offering. In addition, as discussed
above under Note 5, the Company granted 890,670 First Tranche Increase warrants to Lind in connection with the funding of the First
Tranche Increase.
At March 31, 2017, the Company has outstanding
exercisable warrants, as follows:
Number
|
|
|
Exercise
price (C$)
|
|
|
Expiry date
|
|
3,125,000
|
|
|
|
0.72
|
|
|
December 22, 2018
|
|
9,150,285
|
|
|
|
0.75
|
|
|
January 19, 2019
|
|
3,860,800
|
|
|
|
0.85
|
|
|
February 14, 2020
|
|
2,964,682
|
|
|
|
0.85
|
|
|
February 21, 2020
|
|
617,649
|
|
|
|
0.85
|
|
|
February 28, 2020
|
|
890,670
|
|
|
|
0.90
|
|
|
March 31, 2020
|
|
20,609,086
|
|
|
|
|
|
|
|
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial
Statements
March 31, 2017
(expressed in thousands of U.S. dollars, unless
otherwise stated) (unaudited)
|
7.
|
RELATED PARTY TRANSACTIONS AND BALANCES
|
On January 16, 2017, the Company entered into
a non-revolving credit facility agreement (the “Credit Facility”) in the amount of $2,000 with Mark Smith, Chief Executive
Officer and Executive Chairman of NioCorp. The Credit Facility bears an interest rate of 10% and drawdowns from the Credit Facility
are subject to a 2.5% establishment fee. Amounts outstanding under the Credit Facility are secured by all of the Company’s
assets pursuant to a general security agreement between the Company and Mr. Smith dated June 17, 2015. The Credit Facility contains
financial and non-financial covenants customary for a facility of this size and nature. On January 18, 2017, the Company completed
a drawdown from the Credit Facility in the amount of $175.
The Company has an additional loan with Mr.
Smith (the “Original Smith Loan”) that bears an interest rate of 10%, is secured by the Company’s assets pursuant
to a concurrently executed general security agreement, and is subject to both a 2.5% establishment fee and 2.5% prepayment fee.
The principal amount outstanding under the Original Smith Loan is $1,000.
On March 20, 2017, the due dates on the Smith
Credit Facility and the Original Smith Loan were extended to June 16, 2018 and June 17, 2018, respectively.
As of March 31, 2017, accounts payable and
accrued liabilities included interest payable to Mr. Smith of $107.
|
8.
|
EXPLORATION EXPENDITURES
|
|
|
For the three months ended
March 31,
|
|
|
For the nine months ended
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technical studies and engineering
|
|
$
|
1,994
|
|
|
$
|
215
|
|
|
$
|
3,982
|
|
|
$
|
1,878
|
|
Field Management and other
|
|
|
371
|
|
|
|
275
|
|
|
|
1,004
|
|
|
|
668
|
|
Drilling
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
197
|
|
Metallurgical development
|
|
|
366
|
|
|
|
68
|
|
|
|
2,057
|
|
|
|
178
|
|
Geologist and field staff
|
|
|
30
|
|
|
|
8
|
|
|
|
85
|
|
|
|
41
|
|
Total
|
|
$
|
2,761
|
|
|
$
|
566
|
|
|
$
|
7,128
|
|
|
$
|
2,962
|
|
|
9.
|
FAIR VALUE MEASUREMENTS
|
The Company measures the fair value of financial
assets and liabilities based on US GAAP guidance which defines fair value, establishes a framework for measuring fair value, and
expands disclosures about fair value measurements.
The Company classifies financial assets and
liabilities as held-for-trading, available-for-sale, held-to-maturity, loans and receivables, or other financial liabilities depending
on their nature. Financial assets and financial liabilities are recognized at fair value on their initial recognition.
Financial assets and liabilities classified
as held-for-trading are measured at fair value, with gains and losses recognized in net income. Financial assets classified as
held-to-maturity, loans, and receivables, and financial liabilities other than those classified as held-for-trading are measured
at amortized cost, using the effective interest method of amortization. Financial assets classified as available-for-sale are measured
at fair value, with unrealized gains and losses being recognized in income.
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial
Statements
March 31, 2017
(expressed in thousands of U.S. dollars, unless
otherwise stated) (unaudited)
Financial instruments including receivables,
accounts payable and accrued liabilities, and related party loans are carried at amortized cost, which Management believes approximates
fair value due to the short-term nature of these instruments.
The following table presents information about
the assets and liabilities that are measured at fair value on a recurring basis as at March 31, 2017 and June 30, 2016, and indicates
the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general, fair values
determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical instruments. Fair values determined
by Level 2 inputs utilize data points that are observable, such as quoted prices, interest rates, and yield curves. Fair values
determined by Level 3 inputs are unobservable data points for the financial instrument and included situations where there is little,
if any, market activity for the instrument:
|
|
As of March 31, 2017
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,852
|
|
|
$
|
1,852
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Available for sale securities
|
|
|
26
|
|
|
|
26
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
1,878
|
|
|
$
|
1,878
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible debt
|
|
$
|
4,943
|
|
|
$
|
|
|
|
$
|
-
|
|
|
$
|
4,943
|
|
Derivative liability, convertible debt
|
|
|
115
|
|
|
|
-
|
|
|
|
-
|
|
|
|
115
|
|
Total
|
|
$
|
5,058
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
5,058
|
|
|
|
As of June 30, 2016
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
4,412
|
|
|
$
|
4,412
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Available for sale securities
|
|
|
32
|
|
|
|
32
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
4,444
|
|
|
$
|
4,444
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible debt
|
|
$
|
5,991
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
5,991
|
|
Derivative liability, convertible debt
|
|
|
330
|
|
|
|
-
|
|
|
|
-
|
|
|
|
330
|
|
Total
|
|
$
|
6,321
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6,321
|
|
The Company measures the fair market value
of the Level 3 components using the Black-Scholes model and discounted cash flows, as appropriate. These models are prepared by
a third party and take into account Management’s best estimate of the conversion price of the stock, an estimate of the expected
time to conversion, an estimate of the stock’s volatility, and the risk-free rate of return expected for an instrument with
a term equal to the duration of the convertible debt.
The following table sets forth a reconciliation
of changes in the fair value of the Company’s convertible debt components classified as Level 3 in the fair value hierarchy:
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial
Statements
March 31, 2017
(expressed in thousands of U.S. dollars, unless
otherwise stated) (unaudited)
Balance, June 30, 2016
|
|
$
|
6,321
|
|
Additional debt drawdown
|
|
|
1,000
|
|
Conversions to equity
|
|
|
(2,212
|
)
|
Realized and unrealized losses
|
|
|
(51
|
)
|
Balance, March 31, 2017
|
|
$
|
5,058
|
|
On May 10, 2017, the Company announced that it had entered into
an agreement, subject to regulatory approval, with Mackie Research Capital Corporation (“Mackie”), which agreement
was subsequently amended on May 12, 2017. Pursuant to the amended agreement, Mackie has agreed to purchase, on a bought deal short
form prospectus basis, 3,077,000 units of the Company (the “May 2017 Units”) at a price of C$0.65 per May 2017 Unit
for gross proceeds to the Company of up to C$2,000,050 (the “May 2017 Offering”), subject to an option to increase
the size of the May 2017 Offering by up to 15% in May 2017 Units. Each May 2017 Unit will consist of one Common Share and one warrant,
with each warrant entitling the holder to acquire one Common Share at a price of C$0.85 at any time prior to the date which is
three years following completion of the May 2017 Offering. Proceeds of the May 2017 Offering will be used for general working capital
purposes.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table lists
the costs and expenses payable by the Company in connection with the offering of securities covered by this prospectus, other than
any sales commissions or discounts. All amounts shown are estimates except for the SEC registration fee, and all of the fees and
expenses will be borne by the Company.
|
|
Amount
|
|
Securities and Exchange Commission registration fee
|
|
$
|
484
|
|
Legal fees and expenses
|
|
|
20,000
|
*
|
Accounting fees and expenses
|
|
|
5,000
|
*
|
Printing and engraving expenses
|
|
|
2,500
|
*
|
Travel and miscellaneous expenses
|
|
|
500
|
*
|
Total
|
|
$
|
28,484
|
|
*Estimated
|
Item 14.
|
Indemnification of Directors and Officers.
|
The corporate laws of
British Columbia allow us, and our corporate articles require us (subject to the provisions of the BCBCA noted below), to indemnify
our Directors, former Directors, alternate Directors and their heirs and legal personal representatives against all eligible penalties
to which such person is or may be liable, and the Company must, after the final disposition of an eligible proceeding, pay the
expenses actually and reasonably incurred by such person in respect of that proceeding if the eligible party has not been reimbursed
for those expenses and is wholly successful, on the merits or otherwise, in the outcome of the proceeding or is substantially successful
on the merits in the outcome of the proceeding. Each Director and alternate Director is deemed to have contracted with the Company
on the terms of the indemnity contained in our articles.
For the purposes of such
an indemnification:
“eligible party”,
in relation to the Company, means an individual who
|
(1)
|
is or was a Director or officer of the Company,
|
|
(2)
|
is or was a director or officer of another corporation
|
|
(i)
|
at a time when the corporation is or was an affiliate of the Company, or
|
|
(ii)
|
at the request of the Company, or
|
|
(3)
|
at the request of the Company, is or was, or holds or held a position equivalent to that of, a
director or officer of a partnership, trust, joint venture or other unincorporated entity,
|
and includes, except in the definition of “eligible
proceeding” and certain other cases, the heirs and personal or other legal representatives of that individual;
“eligible penalty” means a judgment, penalty
or fine awarded or imposed in, or an amount paid in settlement of, an eligible proceeding;
“eligible proceeding” means a proceeding
in which an eligible party or any of the heirs and personal or other legal representatives of the eligible party, by reason of
the eligible party being or having been a director or officer of, or holding or having held a position equivalent to that of a
director or officer of, the Company or an associated corporation:
|
(1)
|
is or may be joined as a party, or
|
|
(2)
|
is or may be liable for or in respect of a judgment, penalty or fine in, or expenses related to,
the proceeding;
|
“expenses” includes costs, charges and expenses,
including legal and other fees, but does not include judgments, penalties, fines or amounts paid in settlement of a proceeding;
and
“proceeding” includes any legal proceeding
or investigative action, whether current, threatened, pending or completed.
In addition, under the
BCBCA, the Company may pay, as they are incurred in advance of the final disposition of an eligible proceeding, the expenses actually
and reasonably incurred by an eligible party in respect of that proceeding, provided that the Company first receives from the eligible
party a written undertaking that, if it is ultimately determined that the payment of expenses is prohibited by the restrictions
noted below, the eligible party will repay the amounts advanced.
Notwithstanding the provisions
of the Company’s articles noted above, the Company must not indemnify an eligible party or pay the expenses of an eligible
party, if any of the following circumstances apply:
|
(1)
|
if the indemnity or payment is made under an earlier agreement to indemnify or pay expenses and,
at the time that the agreement to indemnify or pay expenses was made, the Company was prohibited from giving the indemnity or paying
the expenses by its memorandum or articles;
|
|
(2)
|
if the indemnity or payment is made otherwise than under an earlier agreement to indemnify or pay
expenses and, at the time that the indemnity or payment is made, the Company is prohibited from giving the indemnity or paying
the expenses by its memorandum or articles;
|
|
(3)
|
if, in relation to the subject matter of the eligible proceeding, the eligible party did not act
honestly and in good faith with a view to the best interests of the Company or the associated corporation, as the case may be;
|
|
(4)
|
in the case of an eligible proceeding other than a civil proceeding, if the eligible party did
not have reasonable grounds for believing that the eligible party’s conduct in respect of which the proceeding was brought
was lawful.
|
In addition, if an eligible
proceeding is brought against an eligible party by or on behalf of the Company or by or on behalf of an associated corporation,
the Company must not do either of the following:
|
(1)
|
indemnify the eligible party under section 160(a) in respect of the proceeding; or
|
|
(2)
|
pay the expenses of the eligible party in respect of the proceeding.
|
Notwithstanding any of
the foregoing, and whether or not payment of expenses or indemnification has been sought, authorized or declined under the BCBCA
or the articles of the Company, on the application of the Company or an eligible party, the Supreme Court of British Columbia may
do one or more of the following:
|
(1)
|
order a company to indemnify an eligible party against any liability incurred by the eligible party
in respect of an eligible proceeding;
|
|
(2)
|
order a company to pay some or all of the expenses incurred by an eligible party in respect of
an eligible proceeding;
|
|
(3)
|
order the enforcement of, or any payment under, an agreement of indemnification entered into by
a company;
|
|
(4)
|
order a company to pay some or all of the expenses actually and reasonably incurred by any person
in obtaining an order under this section;
|
|
(5)
|
make any other order the court considers appropriate.
|
|
Item 15.
|
Recent Sales of Unregistered Securities.
|
In the last three fiscal
years, the Company completed the following financings on an unregistered basis outside the United States pursuant to the exclusion
from registration provided under Rule 903 of Regulation S and inside the United States pursuant to the exemptions from registration
provided by Rule 506 of Regulation D and Section 4(a)(2), in each case in reliance upon the representations received from
the purchasers of the securities.
During the three years
preceding the date hereof, NioCorp has granted an aggregate total 15,880,000 incentive stock options and issued 45,597,616 share
purchase warrants. During the three years preceding the date hereof, NioCorp option holders have exercised an aggregate total of
9,305,000 incentive stock options for Common Shares and 20,175,748 share purchase warrants for Common Shares. The Common Shares
were sold to option holders upon exercise of options to holders that were officers, directors or employees of the Company outside
the United States in accordance with Rule 903 of Regulation S based on the representations of the investors that they reside
outside the United States and were not offered the Common Shares while in the United States and did not exercise the incentive
stock options while in the United States. The Common Shares were sold to option holders upon exercise of options to holders that
were officers, directors or employees of the Company inside the United States pursuant to Rule 701 and Section 4(a)(2) of the Securities
Act. The Common Shares issued upon exercise of warrants were sold to private investors outside the United States in accordance
with Rule 903 of Regulation S based on the representations of the investors that they reside outside the United States and
were not offered the Common Shares while in the United States. The Common Shares issued upon exercise of warrants were sold inside
the United States to “accredited investors” as defined under Rule 501 of Regulation D pursuant to Rule 506 of
Regulation D and Section 4(a)(2) pursuant to the representations of the investors that they qualified as accredited investors.
On December 24, 2013 the
Company announced the second and final tranche of its brokered private placement announced September 23, 2013 for gross proceeds
of $1,653,542 through the sale of 11,023,612 Common Shares. The Common Shares were sold to private investors outside the United
States in accordance with Rule 903 of Regulation S based on the representations of the investors that they reside outside
the United States and were not offered the Common Shares while in the United States. The Common Shares were sold inside the United
States to “accredited investors” as defined under Rule 501 of Regulation D pursuant to Rule 506 of Regulation D
and Section 4(a)(2) pursuant to the representations of the investors that they qualified as accredited investors.
On March 20, 2014 NioCorp
announced the closing of the second and final tranche of a private placement of 18,860,668 Common Shares at a price of C$0.20 per
Common Share for gross proceeds of C$3,772,133. Proceeds of the placement were used to advance the Elk Creek Property and for general
working capital. The Common Shares were sold to private investors outside the United States in accordance with Rule 903 of Regulation S
based on the representations of the investors that they reside outside the United States and were not offered the Common Shares
while in the United States. The Common Shares were sold inside the United States to “accredited investors” as defined
under Rule 501 of Regulation D pursuant to Rule 506 of Regulation D and Section 4(a)(2) pursuant to the representations
of the investors that they qualified as accredited investors.
On November 10, 2014,
the Company closed a partially brokered and partially non-brokered private placement of 19,245,813 special warrants (“2014
Special Warrants”) at an issue price of C$0.55 per 2014 Special Warrant to raise aggregate gross proceeds of C$10,585,197
(the “2014 Offering”). The brokered portion of the 2014 Offering was completed using MRCC, and each 2014 Special Warrant
was exchangeable for no additional consideration into one unit of the Company (a “2014 Unit”). Each 2014 Unit consisted
of one Common Share and one Common Share purchase warrant (a “2014 Warrant”). Each 2014 Warrant entitled the holder
to acquire one Common Share at a price of C$0.65 until November 10, 2016. MRCC received C$112,918 and 205,304 options to acquire
2014 Units in consideration of its services in connection with the 2014 Offering. On January 15, 2015, the Company announced it
had filed and obtained a receipt from the British Columbia Securities Commission for a final short form prospectus dated January
14, 2015. The receipt also evidences that the Ontario Securities Commission had received the filing, as well as regulators in Alberta
and New Brunswick under the Multilateral Instrument 11-102 Passport System. That prospectus qualified the distribution of 19,245,813
2014 Units underlying the 2014 Special Warrants pursuant to the terms thereof, which were deemed to be issued on January 19, 2015.
Proceeds of the Special Warrant private placement were to be used to advance the Elk Creek Property and for general working capital.
The securities were sold to private investors outside the United States in accordance with Rule 903 of Regulation S based
on the representations of the investors that they reside outside the United States and were not offered the securities while in
the United States. The securities were sold inside the United States to “accredited investors” as defined under Rule
501 of Regulation D pursuant to Rule 506 of Regulation D and Section 4(a)(2) pursuant to the representations of the investors
that they qualified as accredited investors.
Pursuant to a financial
services advisory agreement with MRCC, the Company issued 500,000 advisory warrants on December 4, 2014 and 250,000 advisory warrants
on January 14, 2015 (the “Advisory Warrants”). Each Advisory Warrant entitled MRCC to purchase a unit of the Company
at a price of C$0.55 each, on or before December 4, 2016 (each an “Advisory Unit”). Each Advisory Unit consisted of
one Common Share and one warrant exercisable at a price of C$0.65 per share until December 4, 2016. These Advisory Warrants were
exercised during the three-month period ended March 31, 2016, resulting in gross proceeds to the Company of C$412,500, the issuance
of 750,000 Common Shares and granting of an additional 750,000 warrants comprised in the Advisory Units. The warrants were sold
to MRCC outside the United States in accordance with Rule 903 of Regulation S based on the representations of MRCC that they
reside outside the United States and were not offered the warrants while in the United States.
On November 10, 2014,
the Company entered into the TK Agreement whereby TK will purchase approximately 3,750 tonnes or roughly 50 per cent of the Company’s
planned ferro-niobium production from its Elk Creek Project for an initial 10-year term, with an option to extend beyond that time
frame. The agreement presupposes the Company obtaining project financing, obtaining all necessary approvals and constructing a
mine at the Elk Creek Project. Pursuant to the agreement with TK, the Company also granted TK a non-transferable warrant entitling
TK to acquire 8,569,000 Common Shares at an exercise price of C$0.67 until December 12, 2015. The warrant was sold to TK outside
the United States in accordance with Rule 903 of Regulation S based on the representations of TK that they reside outside
the United States and were not offered the warrant while in the United States.
On February 27, 2015,
the Company announced that it had closed a bought deal private placement offering with MRCC consisting of 2,914,000 special warrants
(“2015 Special Warrants”), including the exercise of 15% over-allotment option in full, at an issue price of C$0.75
per 2015 Special Warrant for aggregate gross proceeds of C$2,185,500 (the “2015 Offering”). Each 2015 Special Warrant
was exchangeable for no additional consideration into one unit of the Company (a “2015 Unit”). Each 2015 Unit consisted
of one Common Share and one Common Share purchase warrant (a “2015 Warrant”). Each 2015 Warrant entitled the holder
to acquire one Common Share at a price of C$1.00 until February 27, 2017. The securities were sold to private investors outside
the United States in accordance with Rule 903 of Regulation S based on the representations of the investors that they reside
outside the United States and were not offered the securities while in the United States.
In consideration for its
services in connection with the 2015 Offering, MRCC received a cash commission of C$137,182.50 and 182,910 non-transferable Compensation
Options (“Compensation Options”). Each Compensation Option entitled MRCC to purchase one Common Share at a price of
C$0.85 for a period of 24 months from the closing date of the 2015 Offering. The Compensation Options were sold to MRCC outside
the United States in accordance with Rule 903 of Regulation S based on the representations of MRCC that they reside outside
the United States and were not offered the Compensation Options while in the United States.
On October 22, 2015, the
Company announced that it had closed a non-brokered private placement of unsecured convertible promissory notes (the “Notes”),
for gross proceeds of up to $0.8 million. The Notes bear interest at a rate of 8%, payable annually in arrears, are non-transferable
and have a term of three years from the date of issue. Principal under the Notes is convertible by lenders into, and payable by
the Company in, Common Shares of the Company at a conversion price of C$0.97 per Common Share, calculated on conversion or repayment
using the then-current Bank of Canada noon exchange rate. Accrued but unpaid interest on the Notes will be convertible by the lender
into, and payable by the Company in, Common Shares at a price per Common Share equal to the most recent closing price of the Company’s
Common Shares prior to the delivery to the Company of a request to convert interest, or the annual due date of interest, as applicable,
calculated using the then-current Bank of Canada noon exchange rate. The Notes were sold to private investors outside the United
States in accordance with Rule 903 of Regulation S based on the representations of the investors that they reside outside
the United States and were not offered the Notes while in the United States.
On December 15, 2015,
the Company announced that it would conduct a private placement of up to nine million units (each a “Unit”) of the
Company at a price of C$0.57 per Unit to raise gross proceeds of up to C$5.13 million (the “December Private Placement”).
On January 19, 2016, the Company announced the closing of the December Private Placement on an oversubscribed basis and issued
9,074,835 Units of the Company at a price of C$0.57 per Unit, which raised total gross proceeds of C$5.2 million. Each Unit consists
of one Common Share of the Company and one transferable Common Share purchase warrant. Each purchase warrant is exercisable to
acquire one additional Common Share of the Company for a period of 3 years at a price of C$0.75 per Common Share. In addition,
the Company issued 75,450 broker warrants at closing, each having the same terms as a Warrant, with the exception of transferability.
The securities were sold to private investors outside the United States in accordance with Rule 903 of Regulation S based
on the representations of the investors that they reside outside the United States and were not offered the securities while in
the United States. The securities were sold inside the United States to “accredited investors” as defined under Rule
501 of Regulation D pursuant to Rule 506 of Regulation D and Section 4(a)(2) pursuant to the representations of the investors
that they qualified as accredited investors.
On December 15, 2015,
the Company announced the signing of the Lind Agreement. Through December 31, 2015, an initial $4.0 million was funded pursuant
to the issuance of the Convertible Security, with an additional $0.5 million received as of January 19, 2016, on the issuance of
a further equivalent amount of the Convertible Security, including interest. Lind can increase the funding under the Convertible
Security by an additional $1.0 million during its two-year term. Further, provided certain conditions are met, the Company will
have the right to call an additional $1.0 million under the initial Convertible Security. The securities were sold inside the United
States to Lind as an “accredited investor” as defined under Rule 501 of Regulation D pursuant to Rule 506 of Regulation D
and Section 4(a)(2) pursuant to the representations of Lind that it qualified as an accredited investor.
On December 22, 2015,
the Company closed the first tranche of its private placement with Lind, which comprised an aggregate of (received in tranches
ending January 19, 2016) $4.5 million principal amount 10% secured Convertible Security and 3,125,000 transferable Common Share
purchase warrants (the “Lind Warrants”). The Convertible Security has a term of two years from its date of issuance,
and interest on the Convertible Security is prepaid and added to its principal amount; accordingly, the initial face value of the
Convertible Security is $5.4 million, and the yield of the Convertible Security (if held, unconverted, to maturity) will be 10%
per annum, or $0.9 million. Each Lind Warrant entitles the holder to purchase one additional Common Share at a price of C$0.72
on or before December 22, 2018. The Convertible Security and Lind Warrants were issued pursuant to the Lind Agreement. The Convertible
Security is convertible into Common Shares of the Company at a conversion price equal to 85% of the VWAP (in Canadian dollars)
for the five (5) consecutive trading days immediately prior to the date on which Lind provides the Company with notice of its intention
to convert an amount of the Convertible Security from time to time. The issuance of the Convertible Security and the Lind Warrants
was completed on a non-brokered private placement basis. The Convertible Security is classified as a compound financial instrument
for accounting purposes. Because the Convertible Security is denominated in a currency that is different from the Company’s
functional currency, both the liability and conversion components are carried as borrowings. During the three months ended March
31, 2016, upon the final funding of the convertible security, the Company recorded the fair values of each of the components and
allocated the proportionate costs of the security resulting in some revisions to previously recorded amounts which were not material.
The Convertible Security is secured by the assets of the Company, being the shares of its subsidiaries 0896800 and ECRC. The Convertible
Security is also secured by a security interest over all assets of ECRC. The securities were sold inside the United States to Lind
as “accredited investor” as defined under Rule 501 of Regulation D pursuant to Rule 506 of Regulation D and
Section 4(a)(2) pursuant to the representations of Lind that it qualified as an accredited investor.
Pursuant to a sponsorship
agreement between MRCC and the Company in connection with the Company’s graduation to the Toronto Stock Exchange, the Company
issued 250,000 agent’s sponsorship warrants on January 14, 2015 (the “Sponsor Warrants”), entitling MRCC to purchase
units of the Company (the “Sponsor Units”) at C$0.60 per Sponsor Unit until January 14, 2017. Each Sponsor Unit consisted
of one common Share and one warrant exercisable at C$0.65 per share until January 14, 2017. These Sponsor Warrants were exercised
during the three-month period ended March 31, 2016, resulting in gross proceeds to the Company of C$150,000, the issuance of 250,000
Common Shares and the granting of an additional 250,000 warrants comprised in the Sponsor Units. The Sponsor Units were sold to
MRCC outside the United States in accordance with Rule 903 of Regulation S based on the representations of MRCC that they
reside outside the United States and were not offered the Sponsor Units while in the United States.
On July 11, 2016, we announced
the completion of our warrant exercise program for gross proceeds to us of C$4.8 million. A total of approximately 7.04 million
C$0.65 share purchase warrants expiring November 10, 2016 were exercised. Each holder who exercised one warrant during the program
received 1.11029 Common Shares, representing one warrant share and 0.11029 of a Common Share, as the incentive portion. The program
had been previously approved by our shareholders on May 17, 2016. The Common Shares issued upon exercise of warrants were sold
to private investors outside the United States in accordance with Rule 903 of Regulation S based on the representations of
the investors that they reside outside the United States and were not offered the Common Shares while in the United States. The
Common Shares issued upon exercise of warrants were sold inside the United States to “accredited investors” as defined
under Rule 501 of Regulation D pursuant to Rule 506 of Regulation D and Section 4(a)(2) pursuant to the representations
of the investors that they qualified as accredited investors.
On October 7, 2016, the
Company issued 531,908 common shares of the Company to Lind upon conversion of US$275,000 in principal amount of the Company’s
outstanding convertible note issued in December of 2015 at a conversion price of C$0.6834 per share. The common shares were issued
pursuant to Section 3(a)(9) of the Securities Act, in connection with the voluntary conversion of convertible notes and based upon
representations and warranties of Lind in connection therewith.
On November 9, 2016, the
Company issued 606,359 common shares of the Company to Lind upon conversion of US$275,000 in principal amount of the Company’s
outstanding convertible note issued in December of 2015 at a conversion price of C$0.60792 per share. The common shares were issued
pursuant to Section 3(a)(9) of the Securities Act, in connection with the voluntary conversion of convertible notes and based upon
representations and warranties of Lind in connection therewith.
In October of 2016, the
Company issued 1,220,841 common shares of the Company to private investors upon the exercise of the Company’s outstanding
common share purchase warrants. The Company received aggregate proceeds from the exercise of the warrants of C$793,547. The warrants
were exercised at a price of C$0.65 per share. The common shares were issued inside the United States pursuant to Section 4(a)(2)
of the Securities Act and Rule 506 of Regulation D thereunder and outside the United States pursuant to Rule 903 of Regulation S
under the Securities Act, in each case on the basis of representations and warranties made by the investors at the time of exercise
of the warrants.
From November 1 through
November 12, 2016, the Company issued 2,097,067 common shares of the Company to private investors upon the exercise of the Company’s
outstanding common share purchase warrants. The Company received aggregate proceeds from the exercise of the warrants of C$1,362,444.
The warrants were exercised at a price of C$0.65 per share. The common shares were issued inside the United States pursuant to
Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D thereunder and outside the United States pursuant to Rule
903 of Regulation S under the Securities Act, in each case on the basis of representations and warranties made by the investors
at the time of exercise of the warrants.
On February 1, 2017, the
Company issued 617,971 common shares of the Company to Lind upon conversion of US$275,000 in principal amount of the Company’s
outstanding convertible note issued in December of 2015 at a conversion price of C$0.76641 per share. The common shares were issued
pursuant to Section 3(a)(9) of the Securities Act, in connection with the voluntary conversion of convertible notes and based upon
representations and warranties of Lind in connection therewith.
On February 6, 2017, the
Company issued 1,698,072 common shares of the Company to Lind Asset Management IV, LLC upon conversion of US$750,000 in principal
amount of the Company’s outstanding convertible note issued in December of 2015 at a conversion price of C$0.76426 per share.
The common shares were issued pursuant to Section 3(a)(9) of the Securities Act, in connection with the voluntary conversion of
convertible notes and based upon representations and warranties of Lind in connection therewith.
On February 14, 2017,
the Company issued a notice to Lind Asset Management IV, LLC regarding the first tranche increase. The additional $1.2 million
in face amount of the Initial Convertible Security is convertible into common shares of the Company pursuant to its terms.
On February 14, 2017,
the Company closed the first tranche of its non-brokered private placement announced January 27, 2017. In connection therewith,
the Company issued 3,860,800 units of the Company (each a “Unit”) at a price of C$0.70 per Unit, for aggregate gross
proceeds of C$2,702,560. Each Unit consists of one common share of the Company and one transferable common share purchase warrant,
with each purchase warrant entitling the holder thereof to acquire one additional common share at a price of C$0.85 until February
14, 2020. The Units were issued on a private offering basis to investors with whom the Company had a pre-existing relationship
pursuant to (i) in the case of investors outside of the United States that were not, and were not acting for the account or benefit
of, a U.S. person (as defined in Regulation S under the Securities Act), in accordance with the exclusion from the registration
requirements of the Securities Act provided by Rule 903 of Regulation S thereunder, and (ii) in the case of investors inside
the United States or that were, or were acting for the account or benefit of, a U.S. person, pursuant to the exemption from the
registration requirements of the Securities Act provided by Rule 506(b) of Regulation D thereunder and Section 4(a)(2) thereof,
in each case, pursuant to the representations and covenants of the investors made to the Company in connection with their purchase
of the Units.
On February 21, 2017,
we announced that, further to our existing Lind Agreement, the Company had provided Lind with its First Tranche Increase demand,
pursuant to which the Company called an additional $1 million in funds from Lind under the Lind Agreement. NioCorp was entitled
to demand the First Tranche Increase pursuant to the terms of the Lind Agreement. The First Tranche Increase funds are required
to be delivered by Lind to the Company within 30 trading days, will have a term of two years and bear prepaid interest at a rate
of 10% per annum. In connection with the First Tranche Increase, the Company is obligated to issue Lind First Tranche Increase
Warrants. The First Tranche Increase Warrants will have a term of 36 months from issuance, and the number of First Tranche Warrants
to be issued will be equal to $1.0 million divided by the VWAP for the five (5) consecutive trading days immediately before the
First Tranche Increase funding is received, multiplied by 0.5. The exercise price of the First Tranche Increase Warrants issuable
in connection with the First Tranche Increase will be equal to 120% of the Company’s five (5) trading day VWAP per share
immediately prior to the date the First Tranche Increase funding is received. The First Tranche Increase was issued pursuant to
Section 4(a)(2) of the Securities Act based on representations from Lind at the time of issuance.
On February 28, 2017,
we completed the second and final tranche closing (the “Final Closing”) of our non-brokered private placement of units
announced January 27, 2017, January 30, 2017, and February 10, 2017 (the “February 2017 Offering”). The Final Closing
consisted of the issuance of 3,503,989 units consisting of 2,964,682 units dated February 21, 2017 (each a “February 21,
2017 Unit”) and 539,307 units dated February 28, 2017 (each a “February 28, 2017 Unit”) at a price of C$0.70
per each February 21, 2017 and February 28, 2017 Unit, for gross aggregate proceeds of C$2.5 million. Each February 21, 2017 Unit
consists of one Common Share and one transferable Common Share purchase warrant (each whole such warrant a “February 22,
2017 Warrant”), with each February 21, 2017 Warrant entitling the holder thereof to acquire one additional Common Share at
a price of C$0.85 until February 21, 2020. Each February 28, 2017 Unit consists of one Common Share and one transferable Common
Share purchase warrant (each whole such warrant a “February 28, 2017 Warrant”), with each February 28, 2017 Warrant
entitling the holder thereof to acquire one additional Common Share at a price of C$0.85 until February 28, 2020. The Company paid
cash commissions of C$87,527 and issued 78,342 broker warrants (having the same terms as the Warrants) in connection with the Private
Placement to brokers outside of the United States.
The Units were issued
on a private offering basis to investors with whom the Company had a pre-existing relationship pursuant to (i) in the case of investors
outside of the United States that were not, and were not acting for the account or benefit of, a U.S. person (as defined in Regulation S
under the Securities Act), in accordance with the exclusion from the registration requirements of the Securities Act provided by
Rule 903 of Regulation S thereunder, and (ii) in the case of investors inside the United States or that were, or were acting
for the account or benefit of, a U.S. person, pursuant to the exemption from the registration requirements of the Securities Act
provided by Rule 506(b) of Regulation D thereunder and Section 4(a)(2) thereof, in each case, pursuant to the representations
and covenants of the investors made to the Company in connection with their purchase of the Units.
On March 31, 2017, we
received $1.0 million in First Tranche Increase funding from Lind. In connection with this additional funding, the Company issued
890,670 Lind first tranche increase warrants, at an exercise price of C$0.90 per warrant. The first tranche increase warrants were
issued pursuant to the exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) thereof pursuant
to the representations and covenants of the investor made to the Company.
On April 24, 2017, the Company issued 901,060 common shares
of the Company to Lind Asset Management IV, LLC upon conversion of US$400,000 in principal amount of the Company’s outstanding
convertible note issued in December of 2015 at a conversion price of C$0.59934 per share. The common shares were issued pursuant
to Section 3(a)(9) of the Securities Act, in connection with the voluntary conversion of convertible notes and based upon representations
and warranties of Lind in connection therewith.
On May 16, 2017,
we entered into an underwriting agreement (the “Underwriting Agreement”), subject to regulatory approval,
with Mackie Research Capital Corporation (“Mackie”), pursuant to which Mackie has agreed to purchase, on a bought
deal short form prospectus basis, 3,077,000 units of the Company (the “Units”) at a price of C$0.65 per Unit
(the “Private Placement”), subject to an option to increase the size of the Private Placement by up to 15% in
Units (the “Overallotment Option”). Each Unit will consist of one Common Share and one transferable Common
Share purchase warrant (collectively, the “Selling Shareholder Warrants”), with each Selling Shareholder
Warrant entitling the holder to acquire one Common Share at a price of C$0.85 at any time prior to the date which is 36
months following the closing date of the Private Placement (the “Closing Date”). Assuming that Mackie will
exercise a portion of the Overallotment Option on the Closing Date, we expect to issue an aggregate of 3,538,000 Units on the
Closing Date in connection with the Private Placement. In connection with the closing of the Private Placement and assuming
the exercise of the Overallotment Option in full on the Closing Date, Mackie will also receive 230,005 non-transferable
Common Share purchase warrants (collectively, the “Compensation Warrants”), with each Compensation Warrant
entitling the holder to acquire one Common Share at a price of C$0.65 at any time prior to the date which is 36 months from
the Closing Date. The Units will be issued on a private offering basis pursuant to, in the case of investors outside
of the United States that were not, and were not acting for the account or benefit of, a U.S. person (as defined
in Regulation S under the Securities Act), in accordance with the exclusion from the registration requirements of
the Securities Act provided by Rule 903 of Regulation S thereunder, pursuant to the representations and covenants of the
investors made to the Company in connection with their purchase of the Units. Pursuant to the Underwriting Agreement, the
settlement of the Private Placement, and our receipt of the net proceeds therefrom, will not occur until this Registration
Statement is declared effective by the SEC.
On June 1, 2017, the Company issued 1,489,142 common shares
of the Company to Lind Asset Management IV, LLC upon conversion of US$600,000 in principal amount of the Company’s outstanding
convertible note issued in December of 2015 at a conversion price of C$0.54485 per share. The common shares were issued pursuant
to Section 3(a)(9) of the Securities Act, in connection with the voluntary conversion of convertible notes and based upon representations
and warranties of Lind in connection therewith.
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Item 16.
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Exhibits and Financial Statement Schedules.
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Exhibits
The Exhibits filed herewith
are set forth on the Index to Exhibits filed as a part of this Registration Statement beginning on page II-11 hereof.
The undersigned registrant
hereby undertakes:
To file, during any period
in which offers or sales are being made, a post-effective amendment to this registration statement:
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(i)
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to include any prospectus required by Section 10(a)(3) of the Securities Act;
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(ii)
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to reflect in the prospectus any facts or events arising after the effective date of the registration
statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental
change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration
statement; and
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(iii)
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To include any material information with respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such information in the registration statement.
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That, for the purpose
of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
To remove from registration
by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
For determining liability of the undersigned
registrant under the Securities Act to any purchaser:
i. That each prospectus
filed by the undersigned pursuant to Rule 424(b)(3) shall be part of the registration statement as of the date the filed prospectus
was deemed part of and included in the registration statement; and
ii. Each prospectus
required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B
relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required
by section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier
of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in
the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is
at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the
securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into
the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract
of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document immediately prior to such effective date.
iii. Each prospectus
filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying
on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement
or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference
into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of
contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document immediately prior to such date of first use.
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
Signatures
Pursuant to the requirements
of the Securities Act of 1933, as amended, the registrant has duly caused this Registration Statement on Form S-1 to be signed
on its behalf by the undersigned, thereunto duly authorized, in Denver, Colorado, on June 5, 2017.
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NIOCORP DEVELOPMENTS LTD.
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(Registrant)
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By:
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/s/ Mark A. Smith
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Mark A. Smith
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President and Chief Executive Officer (Principal Executive Officer)
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Pursuant to the requirements
of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities
and on the dates indicated.
KNOW ALL PERSONS BY THESE
PRESENTS, that each person whose signature appears below constitutes and appoints Mark A. Smith and Neal Shah, or either of them,
as true and lawful attorneys-in-fact and agents with full power of substitution and re-substitution, for him and in his name, place
and stead, in any and all capacities to sign the Registration Statement filed herewith and any or all amendments to said Registration
Statement (including post-effective amendments and Registration Statements filed pursuant to Rule 462 and otherwise), and to file
the same, with all exhibits thereto, and other documents in connection therewith, the Securities and Exchange Commission granting
unto said attorney-in-fact and agents the full power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the foregoing, as to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agents or any of them, or his substitute, may lawfully do or cause to be done
by virtue hereof.
/s/
Mark A. Smith
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President, Chief Executive
Officer (Principal
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June 5, 2017
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Mark A. Smith
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Executive Officer and Authorized U.S. Representative)
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and Chairman of the Board of Directors
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/s/ Neal
Shah
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Chief Financial Officer (Principal Financial
and
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June 5, 2017
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Neal Shah
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Accounting Officer)
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/s/
Joseph A. Carrabba
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Director
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June 5, 2017
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Joseph A. Carrabba
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/s/
Michael Morris
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Director
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June 5, 2017
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Michael Morris
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/s/
David C. Beling
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Director
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June 5, 2017
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David C. Beling
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/s/
Anna Castner Wightman
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Director
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June 5, 2017
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Anna Castner Wightman
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INDEX
TO EXHIBITS
Exhibit
No.
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Title
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3.1(1)
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Notice of Articles dated April 5, 2016
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3.2(1)
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Articles dated January 27, 2015
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4.1#(1)
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Option Plan
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4.2(1)
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Special Warrant Indenture in respect of 2014 Special Warrants
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4.3(1)
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Special Warrant Indenture in respect of 2015 Special Warrants
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4.4(1)
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Warrant Indenture in respect of the 2014 Warrants
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4.5(1)
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Warrant Indenture in respect of the 2015 Warrants
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4.6(4)
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Warrant Indenture in respect of the February 2017 Warrants
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4.7(4)
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Form of Subscription Agreement for the February 2017 Units
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4.8(6)
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Form of Lind Warrant
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4.9
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Form of Warrant Indenture in respect of the Warrants
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4.10
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Form of Broker Warrant
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5.1
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Opinion of Blakes, Cassels & Graydon LLP
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10.1#(1)
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Employment Agreement between the Company and Mark A. Smith
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10.2(1)
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Convertible Security Funding Agreement between the Company and
Lind Asset Management IV, LLC, dated December 14, 2015.
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10.3(2)**
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Commercial sales with CMC Cometals
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10.4(1)
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Offtake agreement with ThyssenKrupp Metallurgical Products GmbH
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10.5(2)**
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Beethe008 Extension to Option to Purchase
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10.6(2)**
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Woltemath 003 Extension to Option to Purchase
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10.7(3)
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Smith Credit Agreement
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10.8 (7)
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Smith Security Agreement
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10.9(5)
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Lind Extension Agreement
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10.10(5)
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Smith 2015 Loan Extension Agreement
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10.11(5)
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Smith 2017 Credit Facility Extension Agreement
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16.1(2)
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Letter of Davidson & Company LLP
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21.1(1)
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Subsidiaries of NioCorp Developments Ltd.
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23.1
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Consent of Blakes, Cassels & Graydon LLP (included in Exhibit
5.1)
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23.2
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Consent of BDO USA.
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23.3
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Consent of Eric Larochelle, Beng (SMH Process Innovation)
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23.4
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Consent of Jeff Osborn, Beng Mining, MMSAQP (SRK Principal Consultant, Mining Engineer)
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24.1
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Power of Attorney, contained on signature page hereto
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101.INS(8)
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XBRL Instance Document
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101.SCH(8)
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XBRL Taxonomy Extension – Schema
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101.CAL(8)
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XBRL Taxonomy Extension – Calculations
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101.DEF(8)
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XBRL Taxonomy Extension – Definitions
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101.LAB(8)
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XBRL Taxonomy Extension – Labels
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101.PRE(8)
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XBRL Taxonomy Extension – Presentations
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#
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Management compensation plan, arrangement or agreement.
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(1)
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Previously filed as an exhibit to the Company’s Draft Registration Statement on Form S-1
(Registration No. 377-01354) submitted to the Commission on July 26, 2016 and incorporated herein by reference.
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(2)
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Previously filed as an exhibit to the Company’s Registration Statement on Form S-1 (Registration
No. 333-213451) filed with the Commission on September 2, 2016 and incorporated herein by reference
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(3)
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Previously filed as an exhibit to the Company’s Current Report on Form 8-K (File No. 000-55710)
filed with the Commission on January 20, 2017 and incorporated herein by reference
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(4)
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Previously filed as an exhibit to the Company’s Current Report on Form 8-K (File No. 000-55710)
filed with the Commission on February 21, 2017 and incorporated herein by reference
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(5)
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Previously filed as an exhibit to the Company’s Current Report on Form 8-K (File No. 000-55710)
filed with the Commission on March 24, 2017 and incorporated herein by reference
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(6)
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Previously filed as an exhibit to the Company’s Current Report on Form 8-K (File No. 000-55710)
filed with the Commission on April 5, 2017 and incorporated herein by reference
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(7)
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Previously filed as an exhibit to the Company’s Registration Statement on Form S-1 (Registration
No. 333-217272) filed with the Commission on April 12, 2017 and incorporated herein by reference
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(8)
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Submitted Electronically Herewith. Attached as Exhibit 101 to this report are the following formatted
in XBRL (Extensible Business Reporting Language): (i) the Condensed Interim Consolidated Balance Sheets at June 30, 2016 and June
30, 2015 and at March 31, 2017 and March 31, 2016, (ii) the Condensed Interim Consolidated Statements of Operations and Comprehensive
Loss for the years ended June 30, 2016 and June 30, 2015 and for the three and nine months ended March 31, 2017 and 2016, (iii)
the Condensed Interim Consolidated Statements of Cash Flows for the years ended June 30, 2016 and June 30, 2015 and for the nine
months ended March 31, 2017 and 2016, (iv) the Condensed Interim Consolidated Statements of Changes in Equity for the years ended
June 30, 2016 and June 30, 2015 and for the nine months ended March 31, 2017 and for the year ended June 30, 2016, (v) the Notes
to the Condensed Consolidated Financial Statements and the Condensed Interim Consolidated Financial Statements
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**
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Certain portions of this exhibit have been redacted pursuant to a confidential treatment request
filed with the Commission on September 20, 2016.
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