ITEM
1. FINANCIAL STATEMENTS
Contents
NioCorp Developments Ltd.
Condensed Consolidated Balance Sheets
(expressed in thousands of
U.S. dollars, except share data) (unaudited)
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As of | |
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Note | | |
September 30,
2022 | | |
June 30, 2022 | |
ASSETS | |
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| | |
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Current | |
| | |
| | |
| |
Cash | |
| | | |
$ | 3,192 | | |
$ | 5,280 | |
Prepaid expenses and other | |
| | | |
| 189 | | |
| 402 | |
Total current assets | |
| | | |
| 3,381 | | |
| 5,682 | |
Non-current | |
| | | |
| | | |
| | |
Deferred transaction costs | |
| 5 | | |
| 2,809 | | |
| - | |
Deposits | |
| | | |
| 35 | | |
| 35 | |
Investment in equity securities | |
| | | |
| 10 | | |
| 10 | |
Right-of-use assets | |
| | | |
| 76 | | |
| 94 | |
Land and buildings, net | |
| | | |
| 850 | | |
| 850 | |
Mineral interests | |
| | | |
| 16,085 | | |
| 16,085 | |
Total assets | |
| | | |
$ | 23,246 | | |
$ | 22,756 | |
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LIABILITIES | |
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Current | |
| | | |
| | | |
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Accounts payable and accrued liabilities | |
| 6 | | |
$ | 3,670 | | |
$ | 817 | |
Related party loan | |
| 9 | | |
| 2,000 | | |
| 2,000 | |
Convertible debt | |
| 7 | | |
| 755 | | |
| 2,169 | |
Operating lease liability | |
| 11 | | |
| 86 | | |
| 82 | |
Total current liabilities | |
| | | |
| 6,511 | | |
| 5,068 | |
Non-current | |
| | | |
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Operating lease liability | |
| | | |
| - | | |
| 23 | |
Total liabilities | |
| | | |
| 6,511 | | |
| 5,091 | |
SHAREHOLDERS’ EQUITY | |
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| | | |
| | |
Common shares, unlimited shares authorized; shares outstanding: 279,393,227 at September 30, 2022 and 276,670,606 at June 30, 2022
| |
| 8 | | |
| 130,684 | | |
| 129,055 | |
Accumulated deficit | |
| | | |
| (112,951 | ) | |
| (110,397 | ) |
Accumulated other comprehensive loss | |
| | | |
| (998 | ) | |
| (993 | ) |
Total shareholders’ equity | |
| | | |
| 16,735 | | |
| 17,665 | |
Total liabilities and equity | |
| | | |
$ | 23,246 | | |
$ | 22,756 | |
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)
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For the three months ended September 30, | |
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Note | | |
2022 | | |
2021 | |
Operating expenses | |
| | | |
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Employee related costs | |
| | | |
$ | 293 | | |
$ | 319 | |
Professional fees | |
| | | |
| 164 | | |
| 90 | |
Exploration expenditures | |
| 10 | | |
| 1,288 | | |
| 621 | |
Other operating expenses | |
| | | |
| 337 | | |
| 226 | |
Total operating expenses | |
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| 2,082 | | |
| 1,256 | |
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Foreign exchange loss | |
| | | |
| 173 | | |
| 225 | |
Interest expense | |
| | | |
| 300 | | |
| 605 | |
Other (gain) loss on equity securities | |
| | | |
| (1 | ) | |
| 2 | |
Income tax benefit | |
| | | |
| - | | |
| - | |
Net loss | |
| 4 | | |
$ | 2,554 | | |
$ | 2,088 | |
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Other comprehensive loss: | |
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Net loss | |
| | | |
$ | 2,554 | | |
$ | 2,088 | |
Other comprehensive loss (gain): | |
| | | |
| | | |
| | |
Reporting currency translation | |
| | | |
| 5 | | |
| (124 | ) |
Total comprehensive loss | |
| | | |
$ | 2,559 | | |
$ | 1,964 | |
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| | | |
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| | |
Loss per common share, basic and diluted | |
| | | |
$ | 0.01 | | |
$ | 0.01 | |
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| | | |
| | | |
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Weighted average common shares outstanding | |
| | | |
| 277,926,316 | | |
| 258,023,048 | |
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)
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For the three months
ended September 30, |
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2022 |
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2021 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net loss for the period |
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$ |
(2,554 |
) |
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$ |
(2,088 |
) |
Adjustments to reconcile net loss to net cash used in operations: |
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Unrealized (gain) loss on equity securities |
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(1 |
) |
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2 |
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Accretion of convertible debt |
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236 |
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|
551 |
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Noncash lease expense |
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(2 |
) |
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(1 |
) |
Depreciation |
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1 |
|
|
|
1 |
|
Foreign exchange loss |
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|
177 |
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|
288 |
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Total |
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(2,143 |
) |
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(1,247 |
) |
Change in working capital items: |
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Prepaid expenses and other |
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209 |
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|
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(270 |
) |
Accounts payable and accrued liabilities |
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196 |
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(92 |
) |
Net cash used in operating activities |
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(1,738 |
) |
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(1,609 |
) |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Acquisition of land and buildings |
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- |
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(16 |
) |
Net cash used in financing activities |
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- |
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(16 |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Proceeds from issuance of common shares |
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- |
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|
664 |
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Share issue costs |
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(21 |
) |
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- |
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Related party debt repayments |
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- |
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(318 |
) |
Net cash provided by financing activities |
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(21 |
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|
346 |
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Exchange rate effect on cash and cash equivalents |
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(329 |
) |
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(170 |
) |
Change in cash and cash equivalents during period |
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(2,088 |
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(1,449 |
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Cash and cash equivalents, beginning of period |
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5,280 |
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|
7,317 |
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Cash and cash equivalent, end of period |
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$ |
3,192 |
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$ |
5,868 |
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Supplemental cash flow information: |
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Amounts paid for interest |
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$ |
- |
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$ |
40 |
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Amounts paid for income taxes |
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- |
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- |
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Non-cash financing transactions: |
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Conversions of debt for common shares |
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$ |
1,650 |
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$ |
1,350 |
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Deferred transaction costs, accrued but not paid |
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2,809 |
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- |
|
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 for Common Shares outstanding) (unaudited)
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For the three months ended September 30, 2022 and 2021 |
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Common
Shares
Outstanding |
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Common
Shares |
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Accumulated
Deficit |
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Accumulated
Other
Comprehensive
Loss |
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Total |
|
Balance, June 30, 2021 |
|
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256,379,931 |
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$ |
113,882 |
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|
$ |
(99,510 |
) |
|
$ |
(1,159 |
) |
|
$ |
13,213 |
|
Exercise of warrants |
|
|
871,750 |
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|
|
543 |
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|
|
- |
|
|
|
- |
|
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|
543 |
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Exercise of options |
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|
282,702 |
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|
121 |
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- |
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- |
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|
121 |
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Debt conversions |
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1,583,986 |
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|
1,350 |
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- |
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- |
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|
1,350 |
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Share issuance costs |
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|
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|
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Reporting currency translation |
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- |
|
|
|
- |
|
|
|
- |
|
|
|
124 |
|
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|
124 |
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Loss for the period |
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|
- |
|
|
|
- |
|
|
|
(2,088 |
) |
|
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- |
|
|
|
(2,088 |
) |
Balance, September 30, 2021 |
|
|
259,118,369 |
|
|
$ |
115,896 |
|
|
$ |
(101,598 |
) |
|
$ |
(1,035 |
) |
|
$ |
13,263 |
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Balance, June 30, 2022 |
|
|
276,670,606 |
|
|
$ |
129,055 |
|
|
$ |
(110,397 |
) |
|
$ |
(993 |
) |
|
$ |
17,665 |
|
Exercise of warrants |
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Exercise of options |
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|
|
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|
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Debt conversions |
|
|
2,722,621 |
|
|
|
1,650 |
|
|
|
- |
|
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|
- |
|
|
|
1,650 |
|
Share issuance costs |
|
|
- |
|
|
|
(21 |
) |
|
|
- |
|
|
|
- |
|
|
|
(21 |
) |
Reporting currency translation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(5 |
) |
|
|
(5 |
) |
Loss for the period |
|
|
- |
|
|
|
- |
|
|
|
(2,554 |
) |
|
|
- |
|
|
|
(2,554 |
) |
Balance, September 30, 2022 |
|
|
279,393,227 |
|
|
$ |
130,684 |
|
|
$ |
(112,951 |
) |
|
$ |
(998 |
) |
|
$ |
16,735 |
|
The accompanying notes are an integral
part of these condensed consolidated financial statements.
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
September 30, 2022
(expressed in thousands of
U.S. dollars, except per share amounts or as otherwise stated) (unaudited)
1. |
DESCRIPTION OF BUSINESS |
NioCorp Developments Ltd. (“NioCorp”
or 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 to construction and commercial
operation. As further discussed in Note 4, these matters raised substantial doubt about the Company's ability to continue as a
going concern, and the Company 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 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 interim condensed
consolidated financial statements are those used by the Company as set out in the audited consolidated financial statements for
the year ended June 30, 2022. Certain transactions include reference to Canadian dollars (“C$”) where applicable.
In the opinion of management,
all adjustments considered necessary (including reclassifications and normal recurring adjustments) for a fair statement of the financial
position, results of operations, and cash flows at September 30, 2022, 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 appropriate 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, 2022. The interim results are not necessarily indicative of results for the full year ending
June 30, 2023, or future operating periods.
|
b) |
Recent Accounting Standards |
Issued and Adopted
In August 2020, the FASB issued
ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in
Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), which simplifies the accounting for convertible instruments.
ASU 2020-06 removes certain accounting models which separate the embedded conversion features from the host contract for convertible
instruments. Either a modified retrospective method of transition or a fully retrospective method of transition is permissible
for the adoption of this standard. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim
periods within those fiscal years. The Company adopted ASU 2020-06 on July 1, 2022, with no material effect on the Company’
s current financial position, results of operations or financial statement disclosures.
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
September 30, 2022
(expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited)
Issued and Not Effective
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.
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.
|
d) |
Basic and Diluted Earnings per Share |
Basic net loss per share is computed
by dividing net loss by the weighted average number of Common Shares outstanding during the period. Diluted net loss per share
is computed by dividing the net loss by the weighted-average number of Common Share equivalents outstanding for the period determined
using the treasury stock method or the if-converted method, as applicable. For purposes of this calculation, options to purchase
Common Shares (“Options”) and warrants to purchase Common Shares (“Warrants”) are considered to be Common
Share equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive. The following
shares underlying Options, Warrants, and outstanding convertible debt were antidilutive due to a net loss in the periods
presented and, therefore, were excluded from the dilutive securities computation as indicated below.
Schedule of excluded from the dilutive securities
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For the three months ended September 30, |
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Excluded potentially dilutive securities (1): |
|
2022 |
|
|
2021 |
|
Options |
|
|
14,464,000 |
|
|
|
15,225,000 |
|
Warrants |
|
|
18,516,253 |
|
|
|
13,470,118 |
|
Convertible debt |
|
|
1,030,000 |
|
|
|
14,744,000 |
|
Total potential dilutive securities |
|
|
34,010,253 |
|
|
|
43,439,118 |
|
|
(1) |
The number of shares is based on the maximum number of shares issuable on exercise or conversion of the related securities as of the period end. Such amounts have not been adjusted for the treasury stock method or weighted average outstanding calculations as required if the securities were dilutive. |
As previously reported, the
Company restated its consolidated balance sheets as of June 30, 2022 and 2021, and consolidated statements of operations and comprehensive
income, equity and cash flows for the years ended June 30, 2022 and 2021. In addition, the restatement impacted the
first, second and third quarters of our fiscal year ended June 30, 2022. The summarized restatement impacts for the comparable
interim period in fiscal year 2022 are presented below. The restatement corrects errors related to the accounting for
the unamortized deferred financing costs and debt discounts upon extinguishments of debt related to debt conversions.
.
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
September 30, 2022
(expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited)
Restatement
Impacts to the Condensed Consolidated Statement of Operations and Comprehensive Loss (unaudited)
Restatement
Impacts to the Condensed Consolidated Statement of Operations and Comprehensive Loss (unaudited)
For the Three Months Ended September 30, 2021
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| |
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For the three months ended September 30, 2021 | |
| |
As Previously Reported | | |
Restatement
Impacts | | |
Restated | |
Foreign exchange loss | |
$ | 210 | | |
$ | 15 | | |
$ | 225 | |
Interest expense | |
| 492 | | |
| 113 | | |
| 605 | |
Net loss | |
| 1,960 | | |
| 128 | | |
| 2,088 | |
Reporting currency translation | |
| (109 | ) | |
| (15 | ) | |
| (124 | ) |
Total comprehensive loss | |
| 1,851 | | |
| 113 | | |
| 1,964 | |
Restatement Impacts to the Condensed Consolidated Statement of Cash Flows
(unaudited)
Restatement
Impacts to the Condensed Consolidated Statement of Cash Flows (unaudited)
For
the Three Months Ended September 30, 2021
| |
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| | |
|
| | |
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| |
| |
As Previously Reported | | |
Restatement Impacts | | |
Restated | |
CASH FLOWS FROM OPERATING ACTIVITIES | |
| | | |
| | | |
| | |
Total loss for the period | |
$ | (1,960 | ) | |
$ | (128 | ) | |
$ | (2,088 | ) |
Accretion of convertible debt | |
| 438 | | |
| 113 | | |
| 551 | |
Foreign exchange loss | |
| 273 | | |
| 15 | | |
| 288 | |
Restatement Impact to the Condensed Consolidated Statement of Shareholders' Equity
(unaudited)
Restatement
Impacts to the Condensed Consolidated Statement of Shareholders' Equity (unaudited)
For
the Three Months Ended September 30, 2021
| |
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| | |
|
| | |
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| |
| |
As Previously Reported | | |
Restatement
Impacts | | |
Restated | |
June 30, 2021 opening balance adjustments: | |
| | | |
| | | |
| | |
Deficit | |
$ | (99,076 | ) | |
$ | (434 | ) | |
$ | (99,510 | ) |
Accumulated other comprehensive loss | |
| (1,143 | ) | |
| (16 | ) | |
| (1,159 | ) |
Total Shareholders’ equity | |
| 13,663 | | |
| (450 | ) | |
| 13,213 | |
Activity adjustments: | |
| | | |
| | | |
| | |
Loss for the period | |
| (1,960 | ) | |
| (128 | ) | |
| (2,088 | ) |
Reporting currency translation | |
| 109 | | |
| 15 | | |
| 124 | |
September 30, 2021 ending balance adjustments: | |
| | | |
| | | |
| | |
Deficit | |
| (101,036 | ) | |
| (562 | ) | |
| (101,598 | ) |
Accumulated other comprehensive loss | |
| (1,034 | ) | |
| (1 | ) | |
| (1,035 | ) |
Total equity | |
| 13,826 | | |
| (563 | ) | |
| 13,263 | |
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
September 30, 2022
(expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited)
The Company incurred a loss
of $2,554 for the three months ended September 30, 2022 (2021 - $2,088) and had a working capital deficit of $3,130 and an accumulated
deficit of $112,951 as of September 30, 2022. As a development stage issuer, the Company has not yet commenced its mining operations
and accordingly does not generate any revenue. As of September 30, 2022, the Company had cash of $3,192 which may not be sufficient
to fund normal operations for the next twelve months without deferring payment on certain liabilities or raising additional funds.
In addition, the Company will be required to raise additional funds for construction and commencement of operations. These factors
raise substantial doubt about the Company's ability to continue as a going concern.
The Company’s ability
to continue operations and fund its expenditures, which have historically averaged approximately $1,265 per quarter over the preceding three-year period, is dependent
on management’s ability to secure additional financing. Management is actively pursuing 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. Other
than the proposed business combination and potential financing packages discussed in Note 13, the Company did not have any further
funding commitments or arrangements for additional financing as of September 30, 2022. These consolidated financial statements
do not give effect to any adjustments required to realize the Company’s 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.
Since March 2020, several measures
have been implemented in the United States, Canada, and the rest of the world in response to the increased impact from the novel
coronavirus (“COVID-19”) pandemic and subsequent COVID-19 variants. In addition, recent worldwide events have created
general global economic uncertainty as well as uncertainty in capital markets, supply chain disruptions, increased interest rates,
and the potential for geographic recessions. We believe this could have an adverse impact on our ability to obtain financing, development
plans, results of operations, financial position, and cash flows during the current fiscal year. The full extent to which these
events and our precautionary measures may continue to impact our business will depend on future developments, which continue to
be highly uncertain and cannot be predicted at this time.
5. |
DEFERRED TRANSACTION COSTS |
The Company has deferred third-party costs, including legal fees, other professional
and consulting fees, and due diligence fees, incurred in connection with the proposed transaction discussed in Note 13. These costs
are deferred until closing, at which time a portion of the costs will be recorded against convertible debt to be entered into in connection with the proposed
transaction, with the remainder treated as a reduction to the value of Common Shares issued.
6. |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
Schedule
of account payable and accrued liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|
Note |
|
|
September 30,
2022 |
|
|
June 30,
2022 |
|
Accounts payable, trade |
|
|
|
|
|
$ |
2,904 |
|
|
$ |
115 |
|
Accounts payable accruals |
|
|
|
|
|
|
467 |
|
|
|
654 |
|
Consent accrual |
|
|
13 |
|
|
|
200 |
|
|
|
- |
|
Interest payable to related party |
|
|
9 |
|
|
|
51 |
|
|
|
- |
|
Other accruals |
|
|
|
|
|
|
48 |
|
|
|
48 |
|
Total accounts payable and accrued liabilities |
|
|
|
|
|
$ |
3,670 |
|
|
$ |
817 |
|
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
September 30, 2022
(expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited)
Changes in the convertible security
(the “Lind III Convertible Security”) issued to Lind Global Asset Management III, LLC, are as follows:
|
|
Lind III
Convertible
Security |
|
Balance, June 30, 2022 |
|
$ |
2,169 |
|
Accretion expense |
|
|
236 |
|
Conversions |
|
|
(1,650 |
) |
Balance, September 30, 2022 |
|
$ |
755 |
|
Based on the Company’s
closing Common Share price of C$1.43 as of September 30, 2022, conversion of the remaining Lind III Convertible Security undiscounted
face value of $815 (including accrued interest) would require the issuance of approximately 1,030,000 Common Shares. For each C$0.01
change in the fair value of one Common Share, the total Common Shares the Company would be obligated to issue would change by approximately
8,000 shares.
Schedule of stock option
|
|
Number of
Options |
|
|
Weighted
Average
Exercise
Price |
|
Balance, June 30, 2022 |
|
|
14,464,000 |
|
|
C$ |
0.83 |
|
Granted |
|
|
- |
|
|
|
- |
|
Exercised |
|
|
- |
|
|
|
- |
|
Cancelled/expired |
|
|
- |
|
|
|
- |
|
Balance, September 30, 2022 |
|
|
14,464,000 |
|
|
C$ |
0.83 |
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes
information about Options outstanding at September 30, 2022:
Schedule of information about stock options outstanding
Exercise Price |
|
|
Expiry Date |
|
Number
Outstanding |
|
|
Aggregate
Intrinsic Value |
|
|
Number
Exercisable |
|
|
Aggregate
Intrinsic Value |
|
C$ |
0.47 |
|
|
November 9, 2022 |
|
|
2,804,000 |
|
|
C$ |
2,692 |
|
|
|
2,804,000 |
|
|
C$ |
2,692 |
|
C$ |
0.84 |
|
|
September 18, 2023 |
|
|
1,050,000 |
|
|
|
619 |
|
|
|
1,050,000 |
|
|
|
619 |
|
C$ |
0.54 |
|
|
November 15, 2023 |
|
|
3,785,000 |
|
|
|
3,369 |
|
|
|
3,785,000 |
|
|
|
3,369 |
|
C$ |
0.75 |
|
|
December 14, 2023 |
|
|
1,825,000 |
|
|
|
1,241 |
|
|
|
1,825,000 |
|
|
|
1,241 |
|
C$ |
0.75 |
|
|
December 16, 2023 |
|
|
525,000 |
|
|
|
357 |
|
|
|
525,000 |
|
|
|
357 |
|
C$ |
1.36 |
|
|
December 17, 2024 |
|
|
3,975,000 |
|
|
|
278 |
|
|
|
3,975,000 |
|
|
|
278 |
|
C$ |
1.10 |
|
|
May 30, 2025 |
|
|
500,000 |
|
|
|
165 |
|
|
|
500,000 |
|
|
|
165 |
|
|
|
|
|
|
|
|
14,464,000 |
|
|
C$ |
8,721 |
|
|
|
14,464,000 |
|
|
C$ |
8,721 |
|
The aggregate intrinsic value
in the preceding table represents the total intrinsic value, based on the Company’s closing Common Share price of C$1.43
as of September 30, 2022, that would have been received by the Option holders had all Option holders exercised their Options as
of that date. There were no in-the-money Options vested and exercisable as of September 30, 2022. As of September 30, 2022, there
was $0 of unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Option plans.
NioCorp
Developments Ltd.
Notes
to the Condensed Consolidated Financial Statements
September
30, 2022
(expressed
in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited)
Schedule of warrant transactions
| |
Number of
Warrants | | |
Weighted
Average
Exercise
Price | |
Balance, June 30, 2022 | |
| 18,516,253 | | |
C$ | 1.16 | |
Granted | |
| - | | |
| - | |
Exercised | |
| - | | |
| - | |
Cancelled/expired | |
| - | | |
| - | |
Balance, September 30, 2022 | |
| 18,516,253 | | |
C$ | 1.16 | |
At
September 30, 2022, the Company had outstanding exercisable Common Share purchase warrants (“Warrants”), as follows:
Schedule of outstanding exercisable warrants
|
Number |
|
|
Exercise
Price |
|
|
Expiry
Date |
|
500,000 |
|
|
C$ |
0.80 |
|
|
December
18, 2022 |
|
4,412,118 |
|
|
C$ |
1.63 |
|
|
May
10, 2023 |
|
5,046,135 |
|
|
C$ |
1.10 |
|
|
June
30, 2024 |
|
8,558,000 |
|
|
C$ |
0.97 |
|
|
February
19, 2025 |
|
18,516,253 |
|
|
|
|
|
|
|
9. |
RELATED
PARTY TRANSACTIONS AND BALANCES |
Borrowings
under the non-revolving credit facility agreement (the “Smith Credit Facility”) with Mark Smith, Chief Executive Officer,
President, and Executive Chairman of NioCorp, bear interest at a rate of 10% and drawdowns from the Smith Credit Facility are
subject to a 2.5% establishment fee. Amounts outstanding under the Smith Credit Facility are secured by all of the Company’s
assets pursuant to a general security agreement. The Smith Credit Facility contains financial and non-financial covenants customary
for a facility of its size and nature. The maturity date for the Smith Credit Facility is June 30, 2023.
As
of September 30, 2022, the principal amount outstanding under the Smith Credit Facility was $2,000 and accounts payable and accrued
liabilities as of September 30, 2022, include accrued interest of $51 payable under the Smith Credit Facility.
10. |
EXPLORATION
EXPENDITURES |
Schedule of exploration expenditures
| |
For the Three Months
Ended September 30, | |
| |
2022 | | |
2021 | |
Technical studies and engineering | |
$ | 141 | | |
$ | 50 | |
Field management and other | |
| 154 | | |
| 124 | |
Metallurgical development | |
| 993 | | |
| 436 | |
Geologists and field staff | |
| - | | |
| 11 | |
Total | |
$ | 1,288 | | |
$ | 621 | |
NioCorp
Developments Ltd.
Notes
to the Condensed Consolidated Financial Statements
September
30, 2022
(expressed
in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited)
The
Company incurred lease costs as follows:
| |
|
|
|
|
|
| |
| |
For the Three Months
Ended September 30, | |
| |
2022 | | |
2021 | |
Operating Lease Cost: | |
| | | |
| | |
Fixed rent expense | |
$ | 21 | | |
$ | 21 | |
Variable rent expense | |
| 3 | | |
| 2 | |
Short term lease cost | |
| 2 | | |
| 5 | |
Sublease income | |
| (6 | ) | |
| (5 | ) |
Net lease cost – other operating expense | |
| 20 | | |
| 23 | |
|
|
Fiscal
Year
Lease Maturities |
|
Total
lease payments – through September 2023 |
|
$ |
93 |
|
Less
portion of payments representing interest |
|
|
(7 |
) |
Present
value of lease payments – current lease liability |
|
$ |
86 |
|
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, including investments in equity securities, 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 tables present information about the assets and liabilities that are measured at fair value on a recurring basis as
of September 30, 2022, and June 30, 2022, respectively, and indicate 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 include situations where there is little, if any, market activity for the instrument.
NioCorp
Developments Ltd.
Notes
to the Condensed Consolidated Financial Statements
September
30, 2022
(expressed
in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited)
Schedule of fair values determined by level 3 inputs are unobservable data
| |
As of September 30, 2022 | |
| |
Total | | |
Level 1 | | |
Level 2 | | |
Level 3 | |
Assets: | |
| | |
| | |
| | |
| |
Cash and cash equivalents | |
$ | 3,192 | | |
$ | 3,192 | | |
$ | - | | |
$ | - | |
Equity securities | |
| 10 | | |
| 10 | | |
| - | | |
| - | |
Total | |
$ | 3,202 | | |
$ | 3,202 | | |
$ | - | | |
$ | - | |
| |
As of June 30, 2022 | |
| |
Total | | |
Level 1 | | |
Level 2 | | |
Level 3 | |
Assets: | |
| | |
| | |
| | |
| |
Cash and cash equivalents | |
$ | 5,280 | | |
$ | 5,280 | | |
$ | - | | |
$ | - | |
Equity securities | |
| 10 | | |
| 10 | | |
| - | | |
| - | |
Total | |
$ | 5,290 | | |
$ | 5,290 | | |
$ | - | | |
$ | - | |
The
Lind III Convertible Security discussed in Note 7 was initially recorded at fair value, which represented a nonrecurring
fair value measurement using a Level 3 input. At September 30, 2022 and June 30, 2022, the estimated fair value of this instrument
approximated carrying value given that the instrument was issued in fiscal 2021 and has a short time period until
maturity.
On
September 25, 2022, the Company, GX Acquisition Corp. II, a Delaware corporation (“GXII”), and Big Red Merger Sub
Ltd (“Merger Sub”), a Delaware corporation incorporated in September 2022, and a direct, wholly owned subsidiary
of the Company, entered into a business combination agreement (the “Business Combination Agreement”). Pursuant to
the Business Combination Agreement, as the result of a series of transactions, GXII will become a subsidiary of the Company
(as successor by merger to the Company’s subsidiary, Elk Creek Resources Corporation, a Delaware corporation
(“ECRC”)), with the pre-combination public shareholders of GXII receiving Common Shares based on a fixed exchange
ratio of 11.1829212 (the “Exchange Ratio”) Common Shares for each GXII Class A common share held and not
redeemed, and the GXII founders receiving shares in GXII (as successor by merger to ECRC) based on the Exchange Ratio.
Pursuant to the Business Combination Agreement, after closing, the GXII founders will have the right to exchange such shares
for Common Shares on a one-for-one basis under certain conditions. Pursuant to the Business Combination Agreement, the
Company will also assume the obligations under the issued and outstanding GXII warrants, which will be converted into
warrants exercisable into Common Shares following closing of the Transaction. The Business Combination Agreement contemplates
that the Company will undertake a reverse stock split of the Common Shares at the time of close in connection with an
expected cross-listing to the Nasdaq Stock Market (“Nasdaq”). In addition, pursuant to the Business Combination Agreement,
post-closing, the Company’s Board will include two directors from pre-combination GXII. The transactions contemplated
by the Business Combination Agreement and the ancillary agreements thereto are referred to collectively as the
“Transaction.”
As currently structured, the Business Combination Agreement is expected to be accounted for as a recapitalization in accordance
with GAAP. Under this method of accounting, GXII will be treated as the “acquired” company for financial reporting
purposes. Accordingly, the transaction is treated as the equivalent of NioCorp issuing Common Shares for the net assets of GXII,
accompanied by a recapitalization. The net assets of GXII will be stated at historical cost, with no goodwill or other intangible
assets recorded.
In
addition, in connection with the entry into the Business Combination Agreement, the Company announced the signing of non-binding
letters of intent (“LOIs”) for two separate financing packages with Yorkville Advisors Global, LP (“Yorkville”).
Subject to entering into definitive agreements, these financings could provide the Company with access to up to an additional
$81.0 million to help advance the Elk Creek Project. The financings contemplated by the LOIs include $16.0 million in convertible
debentures that are expected to be funded at the closing of the Transaction, and subject to certain limitations can be repaid
by the Company in either cash or Common Shares, and a standby equity purchase facility pursuant to which the Company will have
the ability to
NioCorp
Developments Ltd.
Notes
to the Condensed Consolidated Financial Statements
September
30, 2022
(expressed
in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited)
require Yorkville, subject to the conditions set out in the definitive agreements, to purchase up to $65.0 million
of its Common Shares.
The
proposed Transaction is expected to close in the first calendar quarter of 2023, subject to the satisfaction or waiver of certain
customary closing conditions contained in the Business Combination Agreement, including, among other things, (i) obtaining required
approvals of the Transaction and related matters by the respective shareholders of NioCorp and GXII, (ii) the effectiveness of
the registration statement on Form S-4 that the Company originally filed on November 7, 2022, (iii) receipt of approval for listing
on Nasdaq of the NioCorp Common Shares to be issued in connection with the Transaction, (iv) receipt of approval for listing on
Nasdaq of the NioCorp warrants to be issued in exchange for the GXII warrants that NioCorp has agreed to assume, (v) receipt of
approval from the TSX with respect to the issuance and listing of the NioCorp Common Shares issuable in connection with the Transaction,
(vi) that NioCorp and its subsidiaries (including GXII, as successor by merger to ECRC) will have at least $5.000001 million of
net tangible assets upon the consummation of the Transaction, after giving effect to any redemptions by GXII public stockholders
and after payment of underwriters’ fees or commissions, (vii) that, at closing, NioCorp and its subsidiaries (including
GXII, as successor by merger to ECRC) will have received cash in an amount equal to or greater than $15.0 million, subject to
certain adjustments, and (viii) the absence of any injunctions enjoining or prohibiting the consummation of the Business Combination
Agreement. The proposed additional financings contemplated by the LOIs will also be subject to the approval of the TSX and the
Company’s shareholders.
On
September 25, 2022, the Company and Lind entered into an agreement (the “Lind Consent”), which included the following
principal terms: (i) the consent of Lind to the Transaction and Yorkville financing transactions, including all actions taken
by NioCorp as set out in the Business Combination Agreement to permit the completion of the Transaction; (ii) the consent of Lind
to NioCorp’s expected Nasdaq listing and the consolidation of the NioCorp Common Shares in order to meet the minimum listing
requirements thereof; (iii) the waiver of Lind of its participation right for up to 15% of the total offering in the proposed
standby equity purchase agreement between NioCorp and Yorkville; and (iv) the waiver of Lind of certain restrictive covenants
in the Lind III Convertible Security.
As
consideration for entering into the Lind Consent, Lind received, amongst other things: (i) the right to receive payment of $500,
which will be reduced to $200 if the Transaction have not been consummated on or before April 30, 2023 (collectively, the Consent
Payment”); (ii) an extension of its existing participation rights under the Lind III Convertible Security in future financings
of NioCorp for a further two year period, subject to certain exceptions as well as an extension of such participation rights beyond
the additional two year period if Yorkville or any affiliate is a party to any such applicable transaction; and (iii) the right
to receive additional warrants (the “Consent Warrants”) if on the date that is eighteen months following consummation
of the Transaction, the closing trading price of the NioCorp Common Shares on the TSX or such other stock exchange on which such
shares may then be listed, is less than C$1.00, subject to adjustments. The number of Consent Warrants to be issued is based on
the Canadian dollar equivalent (based on the then current Canadian to US dollar exchange rate as reported by Bloomberg, LP) of
$5.0 million divided by the five-day VWAP of NioCorp Common Shares on the date of issuance. Further, the number of Consent Warrants
issued will be proportionately adjusted based on the percentage of warrants currently held by Lind that are exercised, if any,
prior to the issuance of any Consent Warrants.
The
final Consent Payment value and the issuance of Consent Warrants under the Lind Consent, if any, are subject to shareholders’
approval of the Transaction, an event which is outside of management control. Therefore, pending shareholders’ approval
of the Transaction, the Company has included the minimum $200 payment at September 30, 2022, as an accrued liability (see Note
6) with a corresponding increase in deferred transaction costs.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The
following discussion and analysis should be read in conjunction with our unaudited condensed interim consolidated financial statements
as of, and for the three months ended September 30, 2022, and the related notes thereto, which have been prepared in accordance
with generally accepted accounting principles in the United States (“US GAAP”). This discussion and analysis
contains forward-looking statements and forward-looking information that involve risks, uncertainties, and assumptions. Our actual
results may differ materially from those anticipated in these forward-looking statements and information as a result of many factors,
including, but not limited to, those set forth elsewhere in this Quarterly Report on Form 10-Q. See “Note Regarding Forward-Looking
Statements” below.
All
currency amounts are stated in thousands of U.S. dollars unless noted otherwise.
As
used in this report, unless the context otherwise indicates, references to “we,” “our,” the “Company,”
“NioCorp,” and “us” refer to NioCorp Developments Ltd. and its subsidiaries, collectively.
Note
Regarding Forward-Looking Statements
This
Quarterly Report on Form 10-Q and the exhibits attached hereto contain “forward-looking statements” within the meaning
of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and “forward-looking information” within the meaning
of applicable Canadian securities legislation (collectively, “forward-looking statements”). Such forward-looking statements
concern our anticipated results and developments in the operations of the Company in future periods, planned exploration activities,
the adequacy of the Company’s financial resources, and other events or conditions that may occur in the future.
Forward-looking
statements have been based upon our current business and operating plans, as approved by the Company’s Board of Directors,
and may include statements regarding our cash and other funding requirements and timing and sources thereof; results of feasibility
studies; the accuracy of mineral resource and reserve estimates and assumptions on which they are based; the results of economic
assessments and exploration activities; and current market conditions and project development plans, and the Transaction (as defined
below). The material assumptions used to develop the forward-looking statements and forward-looking information included in this
Quarterly Report on Form 10-Q include: our expectations of mineral prices; our forecasts and expected cash flows; our projected
capital and operating costs; accuracy of mineral resource estimates and resource modeling and feasibility study results; expectations
regarding mining and metallurgical recoveries; timing and reliability of sampling and assay data; anticipated political and social
conditions; expected national and local government policies, including legal reforms; successful advancement of the Company’s
required permitting processes; and the ability to successfully raise additional capital; NioCorp and GXII (as defined below) being
able to receive all required regulatory, third-party and shareholder approvals for the proposed Transaction; the amount of redemptions
by GXII public stockholders; the execution of definitive agreements relating to the convertible debenture transaction and the
standby equity purchase facility contemplated by the term sheets with Yorkville (as defined below); and other current estimates
and assumptions regarding the proposed Transaction and its benefits.
Forward-looking
statements are frequently, but not always, identified by words such as “expects,” “anticipates,” “believes,”
“intends,” “estimates,” “potential,” “possible,” and similar expressions, or statements
that events, conditions, or results “will,” “may,” “could,” or “should” (or the
negative and grammatical variations of any of these terms) occur or be achieved. 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.
Such forward-looking statements reflect the Company’s current views with respect to future events and are subject to certain
known and unknown risks, uncertainties, and assumptions. Many factors could cause actual results, performance, or achievements
to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking
statements, including, among others, risks related to the following:
Risks
Related to Our Business:
|
● |
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
the restatement of our consolidated financial statements with respect to the Affected Periods and the impact of such restatement
on our future financial statements and other financial measures; |
|
● |
risks related to
the material weakness in our internal control over financial reporting, our efforts to remediate such material weakness and
the timing of remediation; |
|
● |
risks related to
cost increases for our exploration and, if warranted, development projects; |
|
● |
risks related to
a disruption in, or failure of, our information technology systems, including those related to cybersecurity; |
|
● |
risks related to
equipment and supply shortages; |
|
● |
risks related to
current and future offtake agreements, joint ventures, and partnerships; |
|
● |
risks related to
our ability to attract qualified management; |
|
● |
risks related to
the effects of the COVID-19 pandemic or other global health crises on our business plans, financial condition and liquidity;
and |
|
● |
risks related to
the ability to enforce judgment against certain of our directors. |
Risks
Related to Mining and Exploration:
|
● |
risks related to
estimates of mineral resources and reserves; |
|
● |
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 the establishment of a reserve and resource for Rare Earth Elements (“REEs” or “Rare Earths”) and
the development of a viable recovery process for REEs; |
|
● |
risks related
to the estimation of mineral resources and mineral reserves; |
|
● |
risks related to
changes in mineral resource and reserve estimates; |
|
● |
risks related to
competition in the mining industry; |
|
● |
risks related to
the management of the water balance at our Elk Creek Project; |
|
● |
risks related to
claims on the title to our properties; |
|
● |
risks related to
potential future litigation; and |
|
● |
risks related to
our lack of insurance covering all our operations. |
Risks
Related to Government Regulations:
|
● |
risks related to
our ability to obtain or renew 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 changes in federal and/or state laws that may significantly affect the mining industry; |
|
● |
risks related
to the impacts of climate change, as well as actions taken or required by governments related to strengthening resilience
in the face of potential impacts from climate change; and |
|
● |
risks related
to land reclamation requirements. |
Risks
Related to Our Debt:
|
● |
risks related
to covenants contained in agreements with our secured creditors that may affect our assets; and |
|
● |
risks related
to the extent to which our level of indebtedness may impair our ability to obtain additional financing. |
Risks
Related to Our Common Shares:
|
● |
risks related
to qualifying as a “passive foreign investment company” under the U.S. Internal Revenue Code of 1986, as amended;
and |
|
● |
risks related
to our Common Shares, including price volatility, lack of dividend payments, dilution and penny stock rules. |
Risks
Related to the Proposed Transaction
|
● |
risks related to the amount of any redemptions
by GXII public stockholders being greater than expected, which may reduce the cash in trust available to NioCorp upon the
consummation of the Transaction; |
|
● |
risks related to the occurrence of any event,
change or other circumstances that could give rise to the termination of the Business Combination Agreement (as defined below)
and/or payment of the termination fees; |
|
● |
risks related to the outcome of any legal proceedings
that may be instituted against NioCorp or GXII following announcement of the Business Combination Agreement and the Transaction; |
|
● |
risks related to the inability to complete the
Transaction due to, among other things, the failure to obtain NioCorp shareholder approval or GXII stockholder approval or
the execution of definitive agreements relating to the convertible debenture transaction and the standby equity purchase facility
contemplated by the term sheets with Yorkville; |
|
● |
the risk that the announcement and consummation
of the Transaction disrupts NioCorp’s current plans; |
|
● |
risks relating to the ability to recognize the
anticipated benefits of the Transaction; |
|
● |
risks
relating to unexpected costs related to the Transaction; and |
|
|
|
|
● |
the risks that the consummation of the Transaction
is substantially delayed or does not occur, including prior to the date on which GXII is required to liquidate under the terms
of its charter documents. |
Should
one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may
vary materially from those described herein. This list is not exhaustive of the factors that may affect any of the Company’s
forward-looking statements. Forward-looking statements are statements about the future and are inherently uncertain, and actual
achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking
statements due to a variety of risks, uncertainties, and other factors, including without limitation those discussed under the
heading “Risk Factors” of our Annual Report on Form 10-K/A for the fiscal year ended June 30, 2022, as well as other
factors described elsewhere in this report and the Company’s other reports filed with the Securities and Exchange Commission
(“SEC”).
The
Company’s forward-looking statements contained in this Quarterly Report on Form 10-Q are based on the beliefs, expectations,
and opinions of management as of the date of this report. The Company does not assume any obligation to update forward-looking
statements if circumstances or management’s beliefs, expectations, or opinions should change, except as required by law.
For the reasons set forth above, investors should not attribute undue certainty to, or place undue reliance on, forward-looking
statements.
Qualified
Person
All
technical and scientific information included in this Quarterly Report on Form 10-Q derived from the June 2022 Elk Creek Project
feasibility study prepared by qualified persons (within the meaning of both National Instrument 43-101 – Standards of Disclosure
for Mineral Projects (“NI 43-101”) and subpart 1300 of Regulation S-K (“S-K 1300”), as applicable) has
been reviewed and approved by Scott Honan, M.Sc., SME-RM, NioCorp’s Chief Operating Officer. Mr. Honan is a “Qualified
Person” as such term is defined in NI 43-101 and S-K 1300.
Company
Overview
NioCorp
is developing the Elk Creek Project, located in southeast Nebraska. The Elk Creek Project is an advanced Niobium (“Nb”),
Scandium (“Sc”) and Titanium (“Ti”) development stage property. The Company is evaluating the potential
to produce several Rare Earth byproducts from the Elk Creek Project. Niobium is used to produce various superalloys that are extensively
used in high performance aircraft and jet turbines. It also is used in High-Strength, Low-Alloy (“HSLA”) steel, a
stronger steel used in automobiles, bridges, structural systems, buildings, pipelines, and other applications that generally increases
strength and/or reduces weight, which can result in environmental benefits, including reduced fuel consumption and material usage
and fewer air emissions. Scandium can be combined with aluminum to make 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. Rare Earths are critical to electrification and decarbonization initiatives and can
be used to manufacture the strongest permanent magnets commercially available.
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 associated with securing the project financing necessary to complete mine
development and construction of the Elk Creek Project.
Recent
Corporate Events
On
September 25, 2022, the Company, GXII, and Merger Sub, entered into the Business Combination Agreement. Pursuant to the Business
Combination Agreement, as the result of a series of transactions, GXII will become a subsidiary of the Company (as successor by
merger to the Company’s subsidiary, ECRC), with the pre-combination public shareholders of GXII receiving Common Shares
based on the Exchange Ratio of 11.1829212 Common Shares for each GXII Class A common share held and not redeemed, and the GXII
founders receiving shares in GXII (as successor by merger to ECRC) based on the Exchange Ratio. Pursuant to the Business Combination
Agreement, after closing, the GXII founders will have the right to exchange such shares for Common Shares on a one-for-one basis
under certain conditions. Pursuant to the Business Combination Agreement, the Company will also assume the obligations under the
issued and outstanding GXII warrants, which will be converted into warrants exercisable into Common Shares following closing of
the Transaction. The Business Combination Agreement contemplates that the Company will undertake a reverse stock split of the
Common Shares at the time of close in connection with an expected cross-listing to Nasdaq.
In addition, pursuant to the Business Combination Agreement, post-closing, the Company’s Board will include two directors
from pre-combination GXII. The transactions contemplated by the Business Combination Agreement and the ancillary agreements thereto
are referred to collectively as the “Transaction.”
The
business combination pursuant to the Business Combination Agreement will be accounted for as a recapitalization in accordance
with GAAP. Under this method of accounting, GXII will be treated as the “acquired” company for financial reporting
purposes. Accordingly, the transaction is treated as the equivalent of NioCorp issuing Common Shares for the net assets of GXII,
accompanied by a recapitalization. The net assets of GXII will be stated at historical cost, with no goodwill or other intangible
assets recorded.
In
addition, in connection with the entry into the Business Combination Agreement, the Company announced the signing of non-binding
LOIs for two separate financing packages with Yorkville. Subject to entering into definitive agreements, these financings could
provide the Company with access to up to an additional $81.0 million to help advance the Elk Creek Project. The financings contemplated
by the LOIs include $16.0 million in convertible debentures that are expected to be funded at the closing of the Transaction,
and subject to certain limitations can be
repaid by the Company in either cash or Common Shares, and a standby equity purchase
facility pursuant to which the Company will have the ability to require Yorkville, subject to the conditions set out in the definitive
agreements, to purchase up to $65.0 million of its Common Shares.
The
proposed Transaction is expected to close in the first calendar quarter of 2023, subject to the satisfaction or waiver of certain
customary closing conditions contained in the Business Combination Agreement, including, among other things, (i) obtaining required
approvals of the Transaction and related matters by the respective shareholders of NioCorp and GXII, (ii) the effectiveness of
the registration statement on Form S-4 that the Company originally filed on November 7, 2022, (iii) receipt of approval for listing
on Nasdaq of the NioCorp Common Shares to be issued in connection with the Transaction, (iv) receipt of approval for listing on
Nasdaq of the NioCorp warrants to be issued in exchange for the GXII warrants that NioCorp has agreed to assume, (v) receipt of
approval from the TSX with respect to the issuance and listing of the NioCorp Common Shares issuable in connection with the Transaction,
(vi) that NioCorp and its subsidiaries (including GXII, as successor by merger to ECRC) will have at least $5.000001 million of
net tangible assets upon the consummation of the Transaction, after giving effect to any redemptions by GXII public stockholders
and after payment of underwriters’ fees or commissions, (vii) that, at closing, NioCorp and its subsidiaries (including
GXII, as successor by merger to ECRC) will have received cash in an amount equal to or greater than $15.0 million, subject to
certain adjustments, and (viii) the absence of any injunctions enjoining or prohibiting the consummation of the Business Combination
Agreement. The proposed additional financings contemplated by the LOIs will also be subject to the approval of the TSX and the
Company’s shareholders.
Final
proceeds will depend upon redemption rates of current GXII shareholders at the consummation of the proposed Transaction. In connection
with the closing of the Transaction, a significant number of GXII shareholders may exercise their redemption rights. See Part
II, Item 1A, “Risk Factors—If the Transaction is consummated, the combined company may not realize all or any of the
anticipated benefits expected as a result of the Transaction.”
Elk
Creek Project Update
On
September 6, 2022, the Company announced that it filed with the SEC a Technical Report Summary (“TRS”) based on the
Company’s 2022 Feasibility Study for the Elk Creek Critical Minerals Project. The TRS was filed with the SEC to comply with
Item 601(b)(96) and S-K 1300, which regulates disclosure of Mineral Resources and Mineral Reserves. A companion Technical Report
for Canadian purposes, pursuant to National Instrument 43-101 (“NI 43-101”), was filed by NioCorp on SEDAR on June
28, 2022. The technical data and economic conclusions of these reports are substantively identical, with minor differences between
the reports resulting only from the respective disclosure requirements of S-K 1300 and NI 43-101.
On
September 6, 2022, the Company announced that its demonstration-scale processing plant (the “demonstration plant”)
in Quebec, Canada had commenced a three-tonne sample of representative ore from the Elk Creek Project. The demonstration plant
project is intended to demonstrate that the Company can extract and separate rare earth elements from ore that NioCorp expects
to mine from the Project site, subject to receipt of necessary project financing, and that its simplified process for potentially
producing niobium, scandium, and titanium is technically and economically feasible.
The
demonstration plant will process Elk Creek ore samples in three phases.
| ● | Phase
1 is designed to demonstrate a new approach to the initial processing of the ore that
NioCorp expects to mine from the Project site, subject to receipt of necessary project
funding, including calcination, initial leaching, and rare earth extraction; |
| ● | Phase
2 is designed to demonstrate an improved process for the second stage of leaching along
with Niobium and Titanium separation; and |
| ● | Phase
3 is designed to demonstrate the technical viability of separating high-purity versions
of several target magnetic rare earth products from Elk Creek ore samples, as well as
confirming previously achieved high recovery rates for high-purity Scandium trioxide. |
The
potential magnetic rare earth products include Neodymium-Praseodymium (“NdPr”) oxide, Dysprosium oxide, and Terbium
oxide. NioCorp will utilize conventional solvent extraction (“SX”) technology to test a rare earth separation approach
developed by NioCorp and L3 Process Innovation (“L3”).
On
October 25, 2022, the Company announced that its demonstration plant had completed demonstrating its planned process for removing
calcium and magnesium from ore obtained from the Elk Creek Project. This positive result, which is part of Phase I operations
of the demonstration plant, is a key milestone in NioCorp’s proposed optimization of its process flow sheet for the Project,
which was designed by L3 and NioCorp.
The
well-known and time-tested process NioCorp is employing to remove calcium and magnesium carbonates from the ore using thermal
treatment and leaching is part of the demonstration plant’s Phase I flowsheet. This step operated successfully, and the
removed calcium and magnesium were produced at demonstration scale as a mixed calcium and magnesium carbonate. Removing carbonate
minerals in this fashion is expected to reduce the size of the follow-on planned production steps and make them more efficient.
Characterization of the calcium and magnesium carbonate from the completed demonstration plant production runs has demonstrated
very low levels of impurities, and an overall 99% purity of the mixed calcium-magnesium carbonate. Phase I demonstration plant
operations will continue with calcination and a ramp-up of leaching operations as testwork and assembly of Phase II and Phase
III of the demonstration plant’s planned operations proceed in parallel.
Other
Activities
Our
long-term financing efforts continued during the quarter ended September 30, 2022, including the proposed Transaction, discussed
above. As funds become available through the Company’s fundraising efforts, we expect to undertake the following activities:
|
● |
Continuation of
the Company’s efforts to secure federal, state and local permits; |
|
● |
Continued evaluation
of the potential to produce Rare Earth products; |
|
● |
Negotiation
and completion of offtake agreements for the remaining uncommitted production from the project; |
|
● |
Negotiation and
completion of engineering, procurement and construction agreements; |
|
● |
Completion of the
final detailed engineering for the underground portion of the Elk Creek Project; |
|
● |
Initiation and completion
of the final detailed engineering for surface project facilities; |
|
● |
Construction of
natural gas and electrical infrastructure under existing agreements to serve the Elk Creek Project site; |
|
● |
Completion of water
supply agreements and related infrastructure to deliver fresh water to the project site; |
|
● |
Initiation of revised mine
groundwater investigation and control activities; |
|
● |
Land clearing operations intended to prepare
property owned by ECRC for the commencement of project construction, |
|
● |
Initiation of long-lead equipment procurement
activities; and |
|
● |
Operation of a small-scale demonstration plant
to address process recommendations contained in the NI 43-101 technical report for the Elk Creek Project filed on SEDAR on May 29, 2019 and to quantify REE metallurgical performance. |
Financial
and Operating Results
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.
| |
For the Three Months
Ended September 30, | |
| |
2022 | | |
2021 | |
Operating expenses | |
| | | |
| | |
Employee-related costs | |
$ | 293 | | |
$ | 319 | |
Professional fees | |
| 164 | | |
| 90 | |
Exploration expenditures | |
| 1,288 | | |
| 621 | |
Other operating expenses | |
| 337 | | |
| 226 | |
Total operating expenses | |
| 2,082 | | |
| 1,256 | |
| |
| | | |
| | |
Foreign exchange loss | |
| 173 | | |
| 225 | |
Interest expense | |
| 300 | | |
| 605 | |
Loss (gain) on equity securities | |
| (1 | ) | |
| 2 | |
Income tax benefit | |
| - | | |
| - | |
Net loss | |
$ | 2,554 | | |
$ | 2,088 | |
Three
months ended September 30, 2022 compared to three months ended September 30, 2021
Significant
items affecting operating expenses are noted below:
Employee-related
costs decreased in 2022 as compared to 2021 due to timing of the retirement of our general counsel in the second quarter of
fiscal 2021.
Professional
fees increased in 2022 as compared to 2021, primarily due to the timing of legal services related to the TRS filed with the
SEC on September 6, 2022.
Exploration
expenditures increased in 2022 as compared to 2021, primarily due to the timing of demonstration plant development and start-up
costs incurred in 2022, as well as costs related to the completion and filing of the TRS filed with the SEC on September 6, 2022.
Other
operating expenses include investor relations, general office expenditures, equity offering and proxy expenditures, board-related
expenditures and other miscellaneous costs. These costs increased in 2022 as compared to 2021 primarily due to increased financial
advisory fees and investor relations fees associated with our ongoing financing efforts.
Other
significant items impacting the change in the Company’s net loss are noted below:
Foreign
exchange loss is primarily due to changes in the U.S. dollar against the Canadian dollar and reflects the timing of
foreign currency transactions, primarily U.S. dollar-based related party loans, and subsequent changes in exchange rates. The
decline in foreign exchange loss during 2022 as compared 2021 is due to a declining U.S. dollar-based debt balance, partially
offset by increased foreign exchange rates in 2022.
Interest
expense decreased in 2022 as compared to 2021 due to the impacts of conversions on the outstanding balance of the Lind III
Convertible Security.
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, the exercise of incentive
stock options and share purchase warrants, and related party loans.
As
of September 30, 2022, the Company had cash of $3.2 million and a working capital deficit of $3.1 million, compared to cash of
$5.3 million and working capital surplus of $0.6 million on June 30, 2022.
We
expect that the Company will operate at a loss for the foreseeable future. The Company’s current planned cash needs are
approximately $16.0 million until June 30, 2023. In addition to outstanding accounts payable and short-term liabilities, our average
monthly planned expenditures are approximately $1,125 per month where approximately $475 is for corporate overhead and estimated
costs related to securing financing necessary for advancement of the Elk Creek Project. Approximately $650 per month is planned
for expenditures relating to the advancement of Elk Creek Project by NioCorp’s wholly owned subsidiary, ECRC. The Company’s
ability to continue operations and fund our current work plan is dependent on management’s ability to secure additional
financing.
The
Company anticipates that it does not have sufficient cash to continue to fund basic operations for the next twelve months, and
additional funds totaling $12.0 million to $13.5 million are likely to be necessary to continue advancing the project in the areas
of financing, permitting, and detailed engineering. 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.
Elk
Creek property lease commitments are $6 until June 30, 2023. To maintain our currently held properties and fund our currently
anticipated general and administrative costs and planned exploration and development activities at the Elk Creek Project for the
fiscal year ending June 30, 2023, the Company will likely require additional financing during the current fiscal year. Should
such financing not be available in that timeframe, we will be required to reduce our activities and will not be able to carry
out all our presently planned activities at the Elk Creek Project.
On
September 25, 2022, the Company, GXII and Merger Sub entered into the Business Combination Agreement. The NioCorp Board considered
a number of factors as generally supporting its decision to enter into the Business Combination Agreement, including, but not
limited to, the following material factors:
|
● |
Anticipated Acceleration
of Financing Efforts. The Transaction has the potential to (1) provide NioCorp with up to $285.0 million in net cash proceeds
at the consummation of the Transaction, depending upon the amount of redemptions by GXII public stockholders, and up to an
additional $81.0 million over the next three years (as further discussed below), depending on the consummation of other additional financing arrangements
that NioCorp and GXII intend to pursue prior to and following the expected closing of the Transaction and (2) significantly
accelerate NioCorp’s efforts to obtain the required Elk Creek Project financing by increasing exposure to institutional
investors looking to make strategic investments in critical minerals plays that are crucial to the world’s clean energy
transition; |
|
● |
Non-Binding Yorkville
Term Sheets. The signing of non-binding LOIs for two separate financing packages with Yorkville, where, subject to entering
into definitive agreements, such financings could provide NioCorp with access to up to an additional $81.0 million to help
advance the Elk Creek Project. The financings contemplated by the LOIs include $16.0 million in convertible debentures that
are expected to be funded at the closing of the Transaction, and subject to certain limitations can be repaid by NioCorp in
either cash or NioCorp Common Shares, and a standby equity purchase facility pursuant to which NioCorp will have the ability
to require Yorkville, subject to the conditions set out in the definitive agreements, to purchase up to $65.0 million of NioCorp
Common Shares; |
|
● |
Anticipated Benefits
of Nasdaq Listing. A listing on Nasdaq, which is an established national exchange in the United States, would provide
broader access to capital and financing alternatives and would otherwise enhance NioCorp’s public profile; and |
|
● |
Minimum Cash Condition.
The consummation of the Transaction is subject to the satisfaction or waiver of certain closing conditions contained in the
Business Combination Agreement, including, among other things, that, at the closing, NioCorp and its subsidiaries (including
GXII, as successor by merger to ECRC) will have received cash in an amount equal to or greater than $15.0 million, subject
to certain adjustments. |
The
NioCorp Board also considered a variety of uncertainties and risks and other potentially negative factors concerning the Transaction,
including, but not limited to, the following:
| ● | Risks
of Failure to Complete the Transaction. The risks that: |
| o | the
Transaction may not be completed despite the parties’ efforts, including the possibility
that the conditions to the parties’ obligations to complete the Transaction (which
include certain conditions that are not within the control of the parties to the Business
Combination Agreement) may not be satisfied or that completion of the Transaction may
be unduly delayed, and any resulting adverse impacts on NioCorp, its business and the
trading price of NioCorp Common Shares; |
| o | the
circumstances under which the Business Combination Agreement could be terminated and
the impact of such termination, including the requirement that NioCorp must pay GXII
(1) a Base Termination Fee of $15.0 million if it terminates the Business Combination
Agreement in order to enter into an agreement providing for a Superior Proposal (as defined
in the Business Combination Agreement), for a change of recommendation of the NioCorp
Board, or a material breach of certain of NioCorp’s covenants relating to soliciting
acquisition proposals or (2) an Intentional Breach Termination Fee of $25.0 million if
GXII terminates the Business Combination Agreement as a result of a willful and material
breach by NioCorp or as a result of NioCorp’s failure to consummate the closing
of the Transaction within five business days after all the conditions to closing have
been satisfied; |
| o | if
GXII is entitled to the Base Termination Fee or the Intentional Breach Termination Fee
upon termination of the Business Combination Agreement, NioCorp is also required to pay
all documented and reasonable out-of-pocket expenses paid or payable by GXII and its
sponsor in connection with the Business Combination Agreement and the Transaction, not
to exceed $5.0 million; and |
| o | the
substantial costs to be incurred in connection with the Transaction, including those
incurred regardless of whether the Transaction are completed; |
| ● | Risks
Relating to the Benefits of the Transaction. The risks of: |
| o | not
realizing all the anticipated benefits expected as a result of the Transaction, including
the anticipated acceleration of its financing efforts and the benefits of the expected
Nasdaq listing, and that general economic and market conditions outside the control of
the parties to the Business Combination Agreement could deteriorate, any of which could
result in NioCorp being unable to achieve the financing necessary to advance, complete
construction and commence operation of the Elk Creek Project; and |
| o | the
substantial costs to be incurred in connection with the Transaction, including those
incurred regardless of whether the anticipated benefits of the Transaction are realized; |
| ● | Risks
Relating to the Financing. The absence of committed financing and that the parties
may not be able to negotiate definitive documentation related to the Yorkville LOIs or
may not otherwise be able to consummate the financing transactions contemplated thereby,
which could cause NioCorp to encounter difficulties in completing the Transaction with
financing terms as favorable as anticipated or at all; and |
| ● | Restrictions
on the Conduct of Business. The Business Combination Agreement places certain restrictions
on the conduct of the NioCorp business prior to the consummation of the Transaction and
other alternatives reasonably available to NioCorp if it did not pursue the Transaction,
including continuing to pursue alternative financing arrangements. |
Except
as set forth above, 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 any such additional
financing on acceptable terms, if at all. Notwithstanding the restrictions set forth in the Business Combination Agreement, there
is significant uncertainty that we would be able to secure any
additional
financing in the current equity or debt markets. The quantity of funds to be raised and the terms of any proposed equity or debt
financing that may be undertaken will be negotiated by management as opportunities to raise funds arise. In addition to the proposed
Transaction and subject to receipt of the consent of GXII as may be required pursuant to the Business Combination Agreement, management
may 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 arm’s 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. In addition, we could raise funds through the sale of interests in our mineral properties, although current
market conditions and the impacts of the COVID-19 pandemic and other recent worldwide events have substantially reduced the number
of potential buyers/acquirers of any such interests. However, we cannot provide any assurances that we will be able to be successful
in raising such funds.
Based
on the conditions described within, management has concluded and the audit opinion and notes that accompany our financial statements
for the year ended June 30, 2022, disclose that substantial doubt exists as to our ability to continue in business. The financial
statements included in this Quarterly Report on Form 10-Q have been prepared under the assumption that we will continue as a going
concern. We are a development stage issuer and we have incurred losses since our inception. We may not have sufficient cash to
fund normal operations and meet debt obligations for the next twelve months without deferring payment on certain current liabilities
and raising additional funds. The COVID-19 pandemic and other recent worldwide events have created general global economic uncertainty
as well as uncertainty in capital markets, supply chain disruptions, increased interest rates, and the potential for geographic
recessions. During fiscal year 2022 and continuing into fiscal year 2023, these events continued to create uncertainty with respect
to overall project funding and timelines. We believe that the going concern uncertainty cannot be alleviated with confidence until
the Company has entered into a business climate where funding of its planned ongoing operating activities is secured. Therefore,
these factors raise substantial doubt as to our ability to continue as a going concern.
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 our 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 three months ended September 30, 2022, the Company’s operating activities consumed $1.7 million of cash (2021: $1.6
million). The cash used in operating activities for the three months ended September 30, 2022, reflects the Company’s
funding of losses of $2.6 million, partially offset by the accretion of convertible debt and other non-cash transactions.
Overall, operational outflows during the three months ended September 30, 2022, increased slightly from the corresponding
period of 2021 due to an increase in exploration-related spending at the Elk Creek Project. Going forward, the
Company’s working capital requirements are expected to increase substantially in connection with the development of the
Elk Creek Project.
Financing
Activities
Financing
inflows were nil during the three months ended September 30, 2022, as compared to $0.3 million during the corresponding period
in 2021, primarily reflecting the timing of warrant and option exercises during 2021.
Cash
Flow Considerations
The
Company has historically relied upon debt and equity financings to finance its activities. The Company may pursue additional debt
and/or equity financing in the medium term; 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,
including the impacts of the COVID-19 pandemic on the timing and availability of funding, and its success in developing the Elk
Creek Project. Any quoted market for the Common 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 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, 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 “Liquidity and Capital Resources” above for the Company’s discussion
of arrangements related to possible future financings.
Critical
Accounting Estimates
There
have been no material changes in our critical accounting estimates discussed in “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” under the heading “Critical Accounting Estimates and Recent Accounting
Pronouncements” as of June 30, 2022, in our Annual Report on Form 10-K/A for the fiscal year ended June 30, 2022.
Certain
U.S. Federal Income Tax Considerations
NioCorp
believes that it qualified as a “passive foreign investment company” (“PFIC”) as defined under Section
1297 of the U.S. Internal Revenue Code of 1986, as amended, in recent years, including its taxable years ended June 30, 2022 and
June 30, 2021. However, based on the current composition of its income and assets, as well as current business plans and financial
expectations, NioCorp does not currently expect to be treated as a PFIC for its taxable year or foreseeable future taxable years.
However, this conclusion is a factual determination that must be made annually at the close of each taxable year and, thus, is
subject to change. In addition, it is possible notwithstanding NioCorp’s conclusion that the IRS could assert, and that
a court could sustain, a determination that NioCorp is a PFIC. Accordingly, there can be no assurance that NioCorp (or any of
its subsidiaries) will not be treated as a PFIC for any taxable year. Current and prospective United States shareholders should
consult their tax advisors as to the tax consequences of PFIC classification and the U.S. federal tax treatment of PFICs. Additional
information on this matter is included in the “Risk Factors” section of the Company’s Annual Report on Form
10-K/A for the fiscal year ended June 30, 2022, under the heading “Risks Related to the Common Shares.”
Other
The
Company has one class of shares, being Common Shares. A summary of outstanding shares, share options, warrants, and convertible
debt option as of November 14, 2022, is set out below, on a fully-diluted basis.
|
Common
Shares Outstanding
(fully
diluted) |
Common
Shares |
279,450,884 |
Stock
options1 |
14,364,000 |
Warrants1 |
18,516,253 |
Convertible
Debt2 |
1,155,200 |
| 1 | Each
exercisable into one Common Share |
| 2 | Represents
Common Shares issuable on conversion of aggregate outstanding principal amounts of $0.8
million of convertible debt as of November 14, 2022, assuming a market price per Common
Share of $0.81 on that date. |