ITEM
1. FINANCIAL STATEMENTS
Contents
NioCorp Developments Ltd.
Condensed Consolidated Balance Sheets
(expressed in thousands of U.S. dollars, except share data)
(unaudited)
|
|
|
|
|
As of
|
|
|
|
Note
|
|
|
March 31,
2021
|
|
|
June 30,
2020
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
$
|
8,626
|
|
|
$
|
307
|
|
Prepaid expenses and other
|
|
|
|
|
|
24
|
|
|
|
31
|
|
Total current assets
|
|
|
|
|
|
8,650
|
|
|
|
338
|
|
Non-current
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
|
|
|
35
|
|
|
|
35
|
|
Investment in equity securities
|
|
|
|
|
|
19
|
|
|
|
7
|
|
Right of use assets
|
|
10
|
|
|
|
203
|
|
|
|
—
|
|
Mineral interests
|
|
|
|
|
|
10,617
|
|
|
|
10,617
|
|
Total assets
|
|
|
|
|
$
|
19,524
|
|
|
$
|
10,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
4
|
|
|
$
|
488
|
|
|
$
|
3,065
|
|
Related party loan
|
|
8
|
|
|
|
3,818
|
|
|
|
3,818
|
|
Convertible debt
|
|
5
|
|
|
|
1,349
|
|
|
|
838
|
|
Notes payable, current portion
|
|
6
|
|
|
|
—
|
|
|
|
258
|
|
Operating lease liability
|
|
10
|
|
|
|
88
|
|
|
|
—
|
|
Derivative liability, convertible debt
|
|
5
|
|
|
|
—
|
|
|
|
33
|
|
Total current liabilities
|
|
|
|
|
|
5,743
|
|
|
|
8,012
|
|
Non-current
|
|
|
|
|
|
|
|
|
|
|
|
Convertible debt, net of current
|
|
5
|
|
|
|
7,967
|
|
|
|
|
|
Notes payable, net of current portion
|
|
6
|
|
|
|
—
|
|
|
|
344
|
|
Operating lease liability
|
|
10
|
|
|
|
125
|
|
|
|
—
|
|
Total liabilities
|
|
|
|
|
|
13,835
|
|
|
|
8,356
|
|
SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, unlimited shares authorized; shares outstanding: 245,545,587 at March 31, 2021 and 235,925,684 at June 30, 2020
|
|
7
|
|
|
|
90,215
|
|
|
|
84,476
|
|
Additional paid-in capital
|
|
|
|
|
|
14,142
|
|
|
|
13,206
|
|
Accumulated deficit
|
|
|
|
|
|
(97,833
|
)
|
|
|
(94,686
|
)
|
Accumulated other comprehensive loss
|
|
|
|
|
|
(835
|
)
|
|
|
(355
|
)
|
Total shareholder equity
|
|
|
|
|
|
5,689
|
|
|
|
2,641
|
|
Total liabilities and equity
|
|
|
|
|
$
|
19,524
|
|
|
$
|
10,997
|
|
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
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee related costs
|
|
|
|
|
$
|
327
|
|
|
$
|
341
|
|
|
$
|
1,332
|
|
|
$
|
1,040
|
|
Professional fees
|
|
|
|
|
|
83
|
|
|
|
41
|
|
|
|
276
|
|
|
|
226
|
|
Exploration expenditures
|
|
9
|
|
|
|
297
|
|
|
|
294
|
|
|
|
711
|
|
|
|
971
|
|
Other operating expenses
|
|
|
|
|
|
138
|
|
|
|
141
|
|
|
|
802
|
|
|
|
473
|
|
Total operating expenses
|
|
|
|
|
|
845
|
|
|
|
817
|
|
|
|
3,121
|
|
|
|
2,710
|
|
Other income
|
|
6
|
|
|
|
(22
|
)
|
|
|
—
|
|
|
|
(208
|
)
|
|
|
—
|
|
Loss on debt extinguishment
|
|
5
|
|
|
|
—
|
|
|
|
—
|
|
|
|
163
|
|
|
|
—
|
|
Change in financial instrument fair value
|
|
5
|
|
|
|
(60
|
)
|
|
|
(49
|
)
|
|
|
(32
|
)
|
|
|
39
|
|
Foreign exchange (gain) loss
|
|
|
|
|
|
(94
|
)
|
|
|
395
|
|
|
|
(497
|
)
|
|
|
359
|
|
Interest expense
|
|
|
|
|
|
354
|
|
|
|
100
|
|
|
|
612
|
|
|
|
233
|
|
Other (Gain) loss on equity securities
|
|
|
|
|
|
(10
|
)
|
|
|
(1
|
)
|
|
|
(12
|
)
|
|
|
2
|
|
Loss before income taxes
|
|
|
|
|
|
1,013
|
|
|
|
1,262
|
|
|
|
3,147
|
|
|
|
3,343
|
|
Income tax benefit
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Net loss
|
|
3
|
|
|
$
|
1,013
|
|
|
$
|
1,262
|
|
|
$
|
3,147
|
|
|
$
|
3,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
$
|
1,013
|
|
|
$
|
1,262
|
|
|
$
|
3,147
|
|
|
$
|
3,343
|
|
Other comprehensive loss (gain):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reporting currency translation
|
|
|
|
|
|
93
|
|
|
|
(449
|
)
|
|
|
480
|
|
|
|
(406
|
)
|
Total comprehensive loss
|
|
|
|
|
$
|
1,106
|
|
|
$
|
813
|
|
|
$
|
3,627
|
|
|
$
|
2,937
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common share, basic and diluted
|
|
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
241,931,563
|
|
|
|
234,870,686
|
|
|
|
239,283,205
|
|
|
|
234,453,544
|
|
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,
|
|
|
|
2021
|
|
|
2020
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Total loss for the period
|
|
$
|
(3,147
|
)
|
|
$
|
(3,343
|
)
|
Non-cash elements included in net loss:
|
|
|
|
|
|
|
|
|
Change in financial instrument fair value
|
|
|
(32
|
)
|
|
|
39
|
|
Unrealized (gain) loss on equity securities
|
|
|
(12
|
)
|
|
|
1
|
|
Accretion of convertible debt
|
|
|
219
|
|
|
|
—
|
|
Noncash lease expense
|
|
|
10
|
|
|
|
—
|
|
Loss on debt extinguishment
|
|
|
163
|
|
|
|
—
|
|
Gain on debt forgiveness
|
|
|
(196
|
)
|
|
|
—
|
|
Foreign exchange (gain) loss
|
|
|
(453
|
)
|
|
|
331
|
|
Share-based compensation
|
|
|
797
|
|
|
|
145
|
|
|
|
|
(2,651
|
)
|
|
|
(2,827
|
)
|
Change in working capital items:
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
9
|
|
|
|
69
|
|
Accounts payable and accrued liabilities
|
|
|
(1,006
|
)
|
|
|
586
|
|
Net cash used in operating activities
|
|
|
(3,648
|
)
|
|
|
(2,172
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Proceeds from issuance of capital stock
|
|
|
2,847
|
|
|
|
—
|
|
Loan repayments
|
|
|
(406
|
)
|
|
|
—
|
|
Share issuance costs
|
|
|
(1
|
)
|
|
|
—
|
|
Proceeds from debt issuance, net of expenses
|
|
|
9,477
|
|
|
|
—
|
|
Related party debt drawdown
|
|
|
—
|
|
|
|
1,865
|
|
Net cash provided by financing activities
|
|
|
11,917
|
|
|
|
1,865
|
|
Exchange rate effect on cash and cash equivalents
|
|
|
50
|
|
|
|
(2
|
)
|
Change in cash and cash equivalents during period
|
|
|
8,319
|
|
|
|
(309
|
)
|
Cash and cash equivalents, beginning of period
|
|
|
307
|
|
|
|
357
|
|
Cash and cash equivalent, end of period
|
|
$
|
8,626
|
|
|
$
|
48
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
Amounts paid for interest
|
|
$
|
734
|
|
|
$
|
48
|
|
Amounts paid for income taxes
|
|
|
—
|
|
|
|
—
|
|
Non-cash financing transactions
|
|
|
|
|
|
|
|
|
Conversion of accounts payable to convertible debt
|
|
$
|
1,640
|
|
|
$
|
—
|
|
Conversions of debt for common shares
|
|
|
1,256
|
|
|
|
980
|
|
Recognition of operating lease liabilities
|
|
|
231
|
|
|
|
—
|
|
Loan amounts forgiven
|
|
|
196
|
|
|
|
—
|
|
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)
|
|
For the nine months ended March 31, 2021 and 2020
|
|
|
|
Common
Shares
Outstanding
|
|
|
Common
Stock
|
|
|
Additional
Paid-in
Capital
|
|
|
Deficit
|
|
|
Accumulated
Other
Comprehensive
Loss
|
|
|
Total
|
|
Balance, June 30, 2019
|
|
|
232,496,215
|
|
|
$
|
82,939
|
|
|
$
|
13,124
|
|
|
$
|
(90,685
|
)
|
|
$
|
(526
|
)
|
|
$
|
4,852
|
|
Debt conversions
|
|
|
2,444,420
|
|
|
|
980
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
980
|
|
Share-based payments
|
|
|
—
|
|
|
|
—
|
|
|
|
145
|
|
|
|
—
|
|
|
|
—
|
|
|
|
145
|
|
Reporting currency presentation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
406
|
|
|
|
406
|
|
Loss for the period
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,343
|
)
|
|
|
—
|
|
|
|
(3,343
|
)
|
Balance, March 31, 2020
|
|
|
234,940,635
|
|
|
$
|
83,919
|
|
|
$
|
13,269
|
|
|
$
|
(94,028
|
)
|
|
$
|
(120
|
)
|
|
$
|
3,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2020
|
|
|
235,925,684
|
|
|
$
|
84,476
|
|
|
$
|
13,206
|
|
|
$
|
(94,686
|
)
|
|
$
|
(355
|
)
|
|
$
|
2,641
|
|
Exercise of warrants
|
|
|
4,732,261
|
|
|
|
2,942
|
|
|
|
(309
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
2,633
|
|
Exercise of options
|
|
|
2,942,177
|
|
|
|
1,542
|
|
|
|
(1,327
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
215
|
|
Fair value of warrants granted
|
|
|
—
|
|
|
|
—
|
|
|
|
1,775
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,775
|
|
Debt conversions
|
|
|
1,945,465
|
|
|
|
1,256
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,256
|
|
Share issuance costs
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
Share-based payments
|
|
|
—
|
|
|
|
—
|
|
|
|
797
|
|
|
|
—
|
|
|
|
—
|
|
|
|
797
|
|
Reporting currency presentation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(480
|
)
|
|
|
(480
|
)
|
Loss for the period
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,147
|
)
|
|
|
—
|
|
|
|
(3,147
|
)
|
Balance, March 31, 2021
|
|
|
245,545,587
|
|
|
$
|
90,215
|
|
|
$
|
14,142
|
|
|
$
|
(97,833
|
)
|
|
$
|
(835
|
)
|
|
$
|
5,689
|
|
|
|
For the three months ended March 31, 2021 and 2020
|
|
|
|
Common
Shares
Outstanding
|
|
|
Common
Stock
|
|
|
Additional
Paid-in
Capital
|
|
|
Deficit
|
|
|
Accumulated
Other
Comprehensive
Loss
|
|
|
Total
|
|
Balance, December 31, 2019
|
|
|
234,839,598
|
|
|
$
|
83,872
|
|
|
$
|
13,241
|
|
|
$
|
(92,766
|
)
|
|
$
|
(569
|
)
|
|
$
|
3,778
|
|
Debt conversions
|
|
|
101,037
|
|
|
|
47
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
47
|
|
Share-based payments
|
|
|
—
|
|
|
|
—
|
|
|
|
28
|
|
|
|
—
|
|
|
|
—
|
|
|
|
28
|
|
Reporting currency presentation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
449
|
|
|
|
449
|
|
Loss for the period
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,262
|
)
|
|
|
—
|
|
|
|
(1,262
|
)
|
Balance, March 31, 2020
|
|
|
234,940,635
|
|
|
$
|
83,919
|
|
|
$
|
13,269
|
|
|
$
|
(94,028
|
)
|
|
$
|
(120
|
)
|
|
$
|
3,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2020
|
|
|
240,110,267
|
|
|
$
|
86,839
|
|
|
$
|
13,844
|
|
|
$
|
(96,820
|
)
|
|
$
|
(742
|
)
|
|
$
|
3,121
|
|
Exercise of warrants
|
|
|
1,954,839
|
|
|
|
1,328
|
|
|
|
(190
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
1,138
|
|
Exercise of options
|
|
|
2,503,560
|
|
|
|
1,298
|
|
|
|
(1,224
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
74
|
|
Fair value of warrants granted
|
|
|
|
|
|
|
|
|
|
|
1,712
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,712
|
|
Debt conversions
|
|
|
976,921
|
|
|
|
750
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
750
|
|
Share issuance costs
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Share-based payments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Reporting currency presentation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(93
|
)
|
|
|
(93
|
)
|
Loss for the period
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,013
|
)
|
|
|
—
|
|
|
|
(1,013
|
)
|
Balance, March 31, 2021
|
|
|
245,545,587
|
|
|
$
|
90,215
|
|
|
$
|
14,142
|
|
|
$
|
(97,833
|
)
|
|
$
|
(835
|
)
|
|
$
|
5,689
|
|
The accompanying notes are an integral
part of these condensed consolidated financial statements.
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
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 3, the Company’s ability to continue as a going concern
is uncertain and is dependent upon obtaining sufficient financing, the generation of profits from mineral properties, 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, 2020.
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, 2021, 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, 2020. The interim results are not necessarily
indicative of results for the full year ending June 30, 2021, or future operating periods.
|
b)
|
Recent
Accounting Standards
|
Issued
and Adopted
On
July 1, 2020, NioCorp adopted Accounting Standards Update 2018-13 - Fair Value Measurements (Topic 820): Disclosure Framework
- Changes to the Disclosure Requirements for Fair Value Measurement. This update modifies the disclosure requirements on fair
value measurements in Topic 820 and eliminates ‘at a minimum’ from the phrase ‘an entity shall disclose at a
minimum’ to promote the appropriate exercise of discretion by entities when considering fair value disclosures and to clarify
that materiality is an appropriate consideration. The adoption of this standard had no impact on the consolidated financial statements.
Issued
and Not Effective
From
time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board 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.
The
Company incurred a loss of $3,147 for the nine months ended March 31, 2021 (2020 - $3,343) and had an accumulated deficit of $97,833
as of March 31, 2021. As an exploration stage entity, the Company has not yet commenced its mining operations and accordingly
does not generate any revenue.
The Company’s ability to continue operations and fund its expenditures, which have historically
averaged $700 to $850 per quarter, is dependent on management’s ability to secure additional financing. As of March 31, 2021,
the Company had cash of $8,626 which, after consideration of the purchase of land and the private placement funding disclosed in
Note 12, may not be sufficient to fund normal operations and meet debt obligations for the next twelve months without deferring
payment on certain current liabilities and raising additional funds. 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. The
Company has approximately $700 available on its non-revolving credit facility agreement with a related party (refer to Note 8),
however, the Company did not have any further funding commitments or arrangements for additional financing as of March 31, 2021.
These factors raise substantial doubt about the Company’s 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.
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. COVID-19 vaccination programs started in the United
States in December 2020 and currently over one-third of the populations of both Colorado and Nebraska are fully vaccinated. While
the impact of the COVID-19 pandemic is expected to be temporary, the current circumstances are dynamic and the impact on business
operations cannot be reasonably estimated at this time. The continued spread of COVID-19 has resulted in business travel restrictions
and other capital market disruptions, and this has had an impact on the following: the Company’s ability to obtain financing
and advance development plans; and the Company’s results of operations, financial position, and cash flows during the current
fiscal year.
4.
|
ACCOUNTS
PAYABLE AND ACCRUED LIABILITIES
|
|
|
|
|
|
As of
|
|
|
|
Note
|
|
|
March 31,
2021
|
|
|
June 30,
2020
|
|
Accounts payable, trade
|
|
|
|
|
$
|
185
|
|
|
$
|
2,460
|
|
Interest payable to related party
|
|
8
|
|
|
|
107
|
|
|
|
450
|
|
Other accruals
|
|
|
|
|
|
196
|
|
|
|
155
|
|
Total accounts payable and accrued liabilities
|
|
|
|
|
$
|
488
|
|
|
$
|
3,065
|
|
On
December 18, 2020, an accounts payable balance of $1,640 was exchanged for a convertible note as discussed in Note 5.
|
|
As of
|
|
|
|
March 31,
2021
|
|
|
June 30,
2020
|
|
Current Portion
|
|
|
|
|
|
|
|
|
Nordmin Convertible Note
|
|
$
|
1,349
|
|
|
$
|
—
|
|
Convertible promissory notes
|
|
|
—
|
|
|
|
800
|
|
Lind IV Convertible Security
|
|
|
—
|
|
|
|
38
|
|
Total convertible debt, current portion
|
|
$
|
1,349
|
|
|
$
|
838
|
|
Non-Current Portion
|
|
|
|
|
|
|
|
|
Lind III Convertible Security
|
|
$
|
7,967
|
|
|
$
|
—
|
|
Lind
III Convertible Security
On
February 19, 2021, the Company issued to Lind Global Asset Management III, LLC (“Lind III”), an entity managed by
The Lind Partners, a New York-based asset management firm (“The Lind Partners”), a convertible security (the “Lind
III Convertible Security”) pursuant to a definitive convertible security funding agreement, dated as of February 16, 2021
(the “Lind Agreement”), between the Company and Lind III. The Lind III Convertible Security has a face value of $11,700
(representing $10,000 in funding plus an implied 8.5% interest rate per annum for the term of the Lind III Convertible Security).
After deducting a $350 commitment fee as set forth in the Lind Agreement, NioCorp received net proceeds of $9,650 from the funding
of the Lind III Convertible Security. As further discussed in Note 12, on April 23, 2021, the Company used a portion of the proceeds
from the funding of the Lind III Convertible Security to purchase a key land parcel associated with the Company’s Elk Creek
Project, with the remainder to be spent for general corporate purposes.
The
Lind III Convertible Security has a term of (i) 24 months or (ii) 30 calendar days after the date on which the face value of the
Lind III Convertible Security is nil due to such amount having been fully converted and/or fully repaid (including with any applicable
premium) in accordance with the terms of the Lind Agreement, whichever is earlier. The Lind III Convertible Security constitutes
the direct, general and unconditional obligation of the Company and ranks pari-passu with the Company’s other indebtedness.
The Lind III Convertible Security is guaranteed on a secured basis by 0896800 B.C. Ltd., a wholly-owned subsidiary of the Company
(“0896800”), and Elk Creek Resources Corp., a private Nebraska corporation and wholly-owned subsidiary of 0896800
(“ECRC”).
The
Lind III Convertible Security is secured by all of the assets and property of the Company and 0896800, including all of the issued
and outstanding shares of 0896800 pledged by the Company and all of the issued and outstanding shares of ECRC pledged by 0896800,
and certain real property and fixtures of ECRC. The liens securing the Lind III Convertible Security rank pari-passu with the
liens securing: i) the loan with Mark Smith, President, Chief Executive Officer (“CEO”) and Executive Chairman of
NioCorp (the “Smith Loan”), pursuant to the Loan Agreement, dated June 17, 2015, by and between the Company and Mr.
Smith, as amended from time to time; and ii) a non-revolving credit facility (the “Smith Credit Facility”) with a
limit of $3,500 with Mr. Smith, pursuant to the Credit Facility Agreement, dated January 16, 2017, between the Company and Mr.
Smith, as amended from time to time. The liens securing the Lind III Convertible Security rank senior to the liens securing the
Smith Loan and the Smith Credit Facility on any amount that is owed by the Company to Mr. Smith in excess of $4,000.
Pursuant
to the Lind Agreement, Lind III is entitled to convert the Lind III Convertible Security into common shares of the Company (“Common
Shares”) in monthly installments over its term at a price per Common Share equal to 85% of the volume-weighted average price
Common Shares on the Toronto Stock Exchange (“TSX”) for the five trading days immediately preceding to the date on
which Lind III provides notice to the Company of its election to convert. The Lind Agreement provides that Common Shares issuable
upon conversion, together with the number of Common Shares issued upon exercise of Warrants, shall not exceed 43,588,000 Common
Shares. Subject to certain exceptions, the Lind Agreement contains restrictions on how much of the Lind III Convertible Security
may be converted in any particular month. The Lind Agreement also provides NioCorp with the option to buy back the remaining face
amount of the Lind III Convertible Security in cash at any time; provided that, if the Company exercises such option, Lind III
will have the option to convert up to 33.33% of the remaining face amount into Common Shares at the price described above. In
addition, Lind III is entitled to accelerate its conversion right to the full amount of the face value of the Lind III Convertible
Security or demand repayment thereof in cash upon the occurrence of an event of default and other designated events described
in the Lind Agreement.
On
February 19, 2021, in connection with the funding and issuance of the Lind III Convertible Security, the Company issued 8,558,000
Common Share purchase warrants, exercisable at a price per Common Share of C$0.97, expiring February 19, 2025 (the “Lind
III Warrants”), to Lind III pursuant to the Lind Agreement.
The
Company identified embedded derivatives in the Lind III Convertible Security that were evaluated to be immaterial at both the
closing date and at March 31, 2021.
The
Company allocated the net proceeds of $9,650 from the Lind III Convertible Security as follows:
|
●
|
$1,712
was booked to the additional paid in capital equity account, representing the fair value of the Lind III Warrants based
on the Black Scholes pricing model using a risk-free interest rate of 0.40%, an expected dividend yield of 0%, a volatility
of 51.60%, and an expected life of 4.0 years.
|
|
●
|
$7,938
was booked to the convertible debt liability. Transaction costs of $173, in addition to a commitment fee of $350, were recognized
as a direct deduction from the debt liability, resulting a net opening balance of $7,765. This balance will be accreted up
to face value of the Lind III Convertible Security at maturity using the effective interest method and recorded as non-cash
interest expense in the consolidated statement of operations.
|
Based
on the Company’s closing Common Share price of C$1.26 as of March 31, 2021, conversion of the remaining Lind III Convertible
Security balance, including accrued interest, would require the issuance of approximately 13,738,000 Common Shares. For each C$0.01
change in the fair value of one Common Share, the total shares the Company would be obligated to issue would change by approximately
110,000 shares.
Changes
in the Lind III Convertible Security are as follows:
|
|
Convertible
Security
|
|
Initial
valuation
|
|
$
|
7,765
|
|
Accretion
expense
|
|
|
202
|
|
Balance,
March 31, 2021
|
|
$
|
7,967
|
|
Nordmin
Convertible Note
On
December 18, 2020, the Company issued a convertible note in the principal amount of approximately $1,872 (the “Nordmin Convertible
Note”) and 500,000 Common Share purchase warrants, exercisable at a price per Common Share of $0.80, expiring December 18,
2022 (the “Nordmin Warrants”) to Nordmin Engineering Ltd. (“Nordmin”) pursuant to a convertible note and
warrant subscription agreement, dated December 18, 2020 (the “Nordmin Agreement”), between the Company and Nordmin.
Under the Nordmin Agreement, Nordmin agreed to subscribe for and purchase the Nordmin Convertible Note and Nordmin Warrants for
a subscription price of approximately $1,804. This amount was set off against the amount owed to Nordmin by NioCorp for past services.
The
Nordmin Convertible Note will mature on December 18, 2021 and has no stated interest rate, an implied interest rate of 5% per
annum and, subject to certain terms and conditions, is convertible into up to 4,500,000 Common Shares at a conversion price of
92% of the five-day volume-weighted average price of the Common Shares on the TSX at the time of conversion. The Nordmin Convertible
Note contains restrictions on how much of the principal amount may be converted in any 30-day period. The Nordmin Convertible
Note also provides the Company with the option to prepay, in whole or in part, any outstanding principal amount thereunder, upon
three days’ notice to Nordmin. In addition, Nordmin is entitled to accelerate the maturity of the Nordmin Convertible Note
and require the Company to prepay the outstanding principal amount upon the occurrence of an event of default and other designated
events described in the Nordmin Convertible Note. The Nordmin Convertible Note constitutes the direct, general and unconditional
obligation of the Company. The Nordmin Convertible Note is unsecured and ranks effectively junior to the Company’s secured
indebtedness, including under the Lind III Convertible Security, the Smith Loan and the Smith Credit Facility, to the extent of
the value of the assets securing such indebtedness.
Pursuant
to the terms of the Nordmin Agreement, on December 18, 2020, the Company issued 836,551 Common Shares to Nordmin upon an initial
conversion of $450 in principal amount of the Nordmin Convertible Note at a conversion price of C$0.684 per share.
The
Company accounted for this transaction as a debt extinguishment under Accounting Standards Codification 470, Debt. Accordingly,
the Company wrote off the value of the existing obligation, calculated the fair value of the Nordmin Convertible Note and recorded
a loss of $163 on the difference in the consolidated statement of operations. This loss included $63 related to the fair value
of the Nordmin Warrants at closing. The fair value of the Nordmin Warrants was estimated based on the Black Scholes pricing model
using a risk-free interest rate of 0.32%, an expected dividend yield of 0%, a volatility of 43.16%, and an expected life of 2.0
years.
The
Company initially recorded the Nordmin Convertible Note at a fair value of $1,740. The remaining initial fair value balance will
be accreted up to net face value of the Nordmin Convertible Note over the remaining time until maturity using the effective interest
method. In addition, transaction costs of $25 were expensed at closing.
Changes
in the Nordmin Convertible Note are as follows:
|
|
Convertible
Note
|
|
Extinguishment
of accounts payable
|
|
$
|
1,740
|
|
Conversions
|
|
|
(418
|
)
|
Accretion
expense
|
|
|
27
|
|
Balance,
March 31, 2021
|
|
$
|
1,349
|
|
Based
on the Company’s closing Common Share price of C$1.26 as of March 31, 2021, conversion of the remaining Nordmin Convertible
Note balance would require the issuance of 1,346,450 Common Shares. For each C$0.01 change in the fair value of one Common Share,
the total shares the Company would be obligated to issue would change by approximately 10,700 shares.
Convertible
Promissory Notes
Effective
October 12, 2020, the maturity date for $750 of the Company’s outstanding convertible promissory notes was extended for
one year to October 14, 2021. All terms and conditions remained unchanged, except the amended agreement provides that the Company
may repay all or any of the amount of outstanding principal and any accrued but unpaid interest, with 14 days’ advance written
notice (the “Notice”), as follows:
|
●
|
with
respect to the outstanding principal and any accrued but unpaid interest, in cash, using the Bank of Canada daily US$-C$ exchange
rate on the date of the Notice; or
|
|
●
|
with
respect to the outstanding principal only, provided that the volume weighted average trading price of the Common Shares is
C$0.97 or greater for a period of ten consecutive trading days prior to the date of the Notice, and subject to Toronto Stock
Exchange approval, by converting all or any portion of the outstanding principal into Common Shares at a conversion rate of
C$0.97 per Common Share, using the Bank of Canada daily US$-C$ exchange rate on the date of the Notice.
|
One
of the Company’s convertible promissory notes valued at $50 was not extended under the agreement above and was converted
into 67,695 Common Shares on October 14, 2020. On March 16, 2021, the remaining convertible notes, with a face value of $750,
were converted into 976,921 Common Shares. In addition, the Company paid $11 to the noteholders for outstanding interest accrued
through the March 16, 2021 conversion date.
The
changes in the derivative liability related to the conversion feature of the Company’s convertible promissory notes are
as follows:
|
|
Derivative
Liability
|
|
Balance,
June 30, 2020
|
|
$
|
33
|
|
Change
in fair value of derivative liability
|
|
|
(33
|
)
|
Balance,
March 31, 2021
|
|
$
|
-
|
|
Lind
IV Convertible Security
On
July 9, 2020, Lind Asset Management IV, LLC (“Lind IV”), an entity managed by The Lind Partners and the holder of
the convertible security (the “Lind IV Convertible Security”) issued by the Company pursuant to a definitive convertible
security funding agreement, dated June 27, 2018, between the Company and Lind IV, converted the remaining balance thereunder of
$38 into 64,298 Common Shares.
|
|
As of
|
|
|
|
March 31,
2021
|
|
|
June 30,
2020
|
|
Current Portion:
|
|
|
|
|
|
|
|
|
Vendor note
|
|
$
|
—
|
|
|
$
|
166
|
|
SBA loan
|
|
|
—
|
|
|
|
92
|
|
Total current portion
|
|
$
|
—
|
|
|
$
|
258
|
|
Noncurrent Portion:
|
|
|
|
|
|
|
|
|
Vendor note
|
|
$
|
—
|
|
|
$
|
240
|
|
SBA Loan
|
|
|
—
|
|
|
|
104
|
|
Total noncurrent portion
|
|
$
|
—
|
|
|
$
|
344
|
|
SBA
Loan
On
April 17, 2020, ECRC received a U.S. Small Business Administration Loan (the “SBA Loan”) from American National Bank,
pursuant to the Paycheck Protection Program (the “PPP”) established under the Coronavirus Aid, Relief, and Economic
Security Act, commonly referred to as the CARES Act, in the amount of $196. Under the terms of the SBA Loan, the Company may be
eligible for full or partial loan forgiveness. The unforgiven portion of the SBA Loan is payable over two years at an annual interest
rate of 1%, with a deferral of payments for the first six months. The Company used the proceeds for purposes consistent with the
PPP.
On
October 27, 2020, the Company applied for loan forgiveness of $186, comprising the initial SBA Loan balance less $10 representing
an Economic Injury Disaster Loan Advance grant (the “EIDL advance”) received by the Company in April 2020. On November
18, 2020, the Company was notified that the $186 loan forgiveness request had been approved and recorded a corresponding gain
in other income in the consolidated statement of operations.
On
December 21, 2020, the U.S. Congress passed the Consolidated Appropriations Act, 2021 (the “Act”), which provided
additional COVID-19 relief as well as government funding and other bills. The Act removes the previous requirement that PPP borrowers
deduct the amount of any EIDL advance from their PPP forgiveness amount. The SBA released Procedural Notice 5000-20075, effective
January 8, 2021, stating that the SBA will no longer deduct EIDL Advances from forgiveness payments remitted to PPP lenders. Accordingly,
the Company recorded a gain in other income in the consolidated statement of operations for the remaining $10 of the SBA Loan.
Vendor
Note
On
April 13, 2020, the Company entered into an agreement with a vendor to convert amounts due for services performed to a 28-month
note payable at a stated interest rate of 3%. The Company paid off the remaining note balance of $290 on March 30, 2021.
|
|
|
Number
of
Options
|
|
|
Weighted
Average
Exercise
Price
|
|
Balance,
June 30, 2020
|
|
|
19,129,409
|
|
|
C$
|
0.62
|
|
Granted
|
|
|
3,700,000
|
|
|
|
0.78
|
|
Exercised
|
|
|
(2,942,177
|
)
|
|
|
0.61
|
|
Cancelled/expired
|
|
|
(3,897,232
|
)
|
|
|
0.64
|
|
Balance,
March 31, 2021
|
|
|
15,990,000
|
|
|
C$
|
0.66
|
|
|
|
|
|
|
|
|
|
|
The
Company granted 3,700,000 options at an average fair value price of $C0.25 per option, based on Black-Scholes models with an average
risk-free rate of 0.26%, average stock price volatility of 54.07%, and a three-year expected option life.
The
following table summarizes information about options to purchase Common Shares (“Options”) outstanding at March 31,
2021:
Exercise
Price
|
|
|
Expiry
Date
|
|
Number
Outstanding
|
|
|
Aggregate
Intrinsic Value
|
|
|
Number
Exercisable
|
|
|
Aggregate
Intrinsic Value
|
|
C$
|
0.94
|
|
|
July
21, 2021
|
|
|
540,000
|
|
|
C$
|
173
|
|
|
|
540,000
|
|
|
C$
|
173
|
|
C$
|
0.76
|
|
|
March
6, 2022
|
|
|
4,700,000
|
|
|
|
2,350
|
|
|
|
4,700,000
|
|
|
|
2,350
|
|
C$
|
0.47
|
|
|
November
9, 2022
|
|
|
3,205,000
|
|
|
|
2,532
|
|
|
|
3,205,000
|
|
|
|
2,532
|
|
C$
|
0.84
|
|
|
September
18, 2023
|
|
|
1,050,000
|
|
|
|
441
|
|
|
|
1,050,000
|
|
|
|
441
|
|
C$
|
0.54
|
|
|
November
15, 2023
|
|
|
4,120,000
|
|
|
|
2,966
|
|
|
|
4,120,000
|
|
|
|
2,966
|
|
C$
|
0.75
|
|
|
December
14, 2023
|
|
|
1,825,000
|
|
|
|
931
|
|
|
|
1,825,000
|
|
|
|
931
|
|
C$
|
0.75
|
|
|
December
16, 2023
|
|
|
550,000
|
|
|
|
281
|
|
|
|
550,000
|
|
|
|
281
|
|
|
|
|
|
|
|
|
15,990,000
|
|
|
C$
|
9,674
|
|
|
|
15,990,000
|
|
|
C$
|
9,674
|
|
The
aggregate intrinsic value in the preceding table represents the total intrinsic value, based on the Company’s closing Common
Share price of C$1.26 as of March 31, 2021, that 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 March 31, 2021, was 15,990,000.
As of March 31, 2021, there was $0 of unrecognized compensation cost related to unvested share-based compensation arrangements
granted under the Option plans.
|
b)
|
Warrants
|
|
|
Warrants
|
|
|
Weighted
Average
Exercise Price
|
|
Balance
June 30, 2020
|
|
|
12,376,451
|
|
|
C$
|
0.74
|
|
Granted
|
|
|
9,058,000
|
|
|
|
0.96
|
|
Exercised
|
|
|
(4,732,261
|
)
|
|
|
0.72
|
|
Expired
|
|
|
(2,398,418
|
)
|
|
|
0.71
|
|
Balance,
March 31, 2021
|
|
|
14,303,772
|
|
|
C$
|
0.89
|
|
|
|
|
|
|
|
|
|
|
|
|
At
March 31, 2021, the Company had outstanding exercisable Common Share purchase warrants (“Warrants”), as follows:
Number
|
|
|
Exercise
Price
|
|
|
Expiry
Date
|
|
658,872
|
|
|
C$
|
0.72
|
|
|
April
5, 2021
|
|
298,581
|
|
|
C$
|
0.72
|
|
|
April
29, 2021
|
|
645,250
|
|
|
C$
|
0.72
|
|
|
May
9, 2021
|
|
1,035,319
|
|
|
C$
|
0.77
|
|
|
July
9, 2021
|
|
2,607,750
|
|
|
C$
|
0.79
|
|
|
July
26, 2021
|
|
500,000
|
|
|
C$
|
0.80
|
|
|
December
18, 2022
|
|
8,558,000
|
|
|
C$
|
0.97
|
|
|
February
19, 2025
|
|
14,303,772
|
|
|
|
|
|
|
|
See
Note 5 for more information regarding the issuance of the Lind III Warrants and the Nordmin Warrants.
|
8.
|
RELATED
PARTY TRANSACTIONS AND BALANCES
|
The
Smith Loan bears an interest rate of 10%, is secured by the Company’s assets pursuant to a concurrently executed general
security agreement (the “General Security Agreement”) and is subject to both a 2.5% establishment fee and 2.5% prepayment
fee. As of March 31, 2021, the principal amount outstanding under the Smith Loan was $1,000.
Borrowings
under the Smith Credit Facility 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 the General Security Agreement. The Smith Credit Facility contains financial and non-financial covenants customary for a facility
of its size and nature. As of March 31, 2021, the principal amount outstanding under the Smith Credit Facility was $2,818.
On
December 14, 2020, the maturity dates for the Smith Loan and the Smith Credit Facility were extended from December 15, 2020 to
December 15, 2021.
On
February 23, 2021, the Company paid Mr. Smith $726 related to accrued interest and origination fees through December 31, 2020.
Accounts payable and accrued liabilities as of March 31, 2021 include accrued interest of $107 payable to Mr. Smith under the
Smith Loan and the Smith Credit Facility.
9.
|
Exploration
Expenditures
|
|
|
For the Three Months
Ended March 31,
|
|
|
For the Nine Months
Ended March 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Technical studies and engineering
|
|
$
|
10
|
|
|
$
|
9
|
|
|
$
|
11
|
|
|
$
|
32
|
|
Field management and other
|
|
|
198
|
|
|
|
236
|
|
|
|
527
|
|
|
|
806
|
|
Metallurgical development
|
|
|
44
|
|
|
|
49
|
|
|
|
128
|
|
|
|
133
|
|
Geologists and field staff
|
|
|
45
|
|
|
|
—
|
|
|
|
45
|
|
|
|
—
|
|
Total
|
|
$
|
297
|
|
|
$
|
294
|
|
|
$
|
711
|
|
|
$
|
971
|
|
Effective
August 1, 2020, the Company entered into a three-year corporate office lease extension and recognized the corresponding right
of use asset and lease liability associated with this lease extension, along with two existing nominal leases. The Company has
applied a discount rate of 16%.
These
three operating leases have an average remaining life of 2.0 years as of March 31, 2021. The Company incurred lease costs of $81
and $77 for the nine months ended March 31, 2021 and 2020, respectively.
The
maturities of lease liabilities are as follows at March 31, 2021:
|
|
Fiscal
Year
Lease Maturities
|
|
2021
|
|
$
|
28
|
|
2022
|
|
|
110
|
|
2023
and thereafter
|
|
|
115
|
|
Total
lease payments
|
|
|
253
|
|
Less
portion of payments representing interest
|
|
|
(40
|
)
|
Present
value of lease payments
|
|
$
|
213
|
|
Less
current portion of lease liability
|
|
|
88
|
|
Noncurrent
lease liability
|
|
$
|
125
|
|
11.
|
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 tables present information about the assets and liabilities that are measured at fair value on a recurring basis as
of March 31, 2021 and June 30, 2020, 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.
|
|
As of March 31, 2021
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
8,626
|
|
|
$
|
8,626
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Equity securities
|
|
|
19
|
|
|
|
19
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
$
|
8,645
|
|
|
$
|
8,645
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
As of June 30, 2020
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
307
|
|
|
$
|
307
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Equity securities
|
|
|
7
|
|
|
|
7
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
$
|
314
|
|
|
$
|
314
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible debt
|
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
38
|
|
Derivative liability, convertible debt
|
|
|
33
|
|
|
|
—
|
|
|
|
—
|
|
|
|
33
|
|
Total
|
|
$
|
71
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
71
|
|
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 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:
Balance, June 30, 2020
|
|
$
|
71
|
|
Additions to convertible debt
|
|
|
—
|
|
Conversions to equity
|
|
|
(38
|
)
|
Realized and unrealized losses
|
|
|
(33
|
)
|
Balance, March 31, 2021
|
|
$
|
—
|
|
As
discussed in Note 5, the Nordmin Convertible Note and Lind III Convertible Security were initially recorded at fair value, which
represents a nonrecurring fair value measurement using a Level 3 input. The significant unobservable valuation inputs for the
Nordmin Convertible Note and Lind III Convertible Security includes an expected return of 7% and 21%, respectively.
On
February 22, 2021, the Company announced that it formally exercised its option to purchase two parcels of land and associated
rights in Johnson County, Nebraska associated with the Company’s Elk Creek Project, pursuant to the Amended and Restated
Option to Purchase, dated as of April 29, 2020 (the “Option Agreement”), between Beverly J. Beethe and ECRC. On April
23, 2021, ECRC formally exercised and closed on the Option Agreement. Pursuant to the terms of the Option Agreement, the Owner
sold, transferred, conveyed and assigned all of her rights, privileges, title and interest in and to the real property to ECRC,
including any associated oil, gas and mineral rights. The Option Agreement provides for a purchase price calculated based on the
appraised value per acre of the parcels of land, the mineral rights and the structures erected on the land. The purchase price
was approximately $6.2 million.
On April 30, 2021, the Company repaid $1,000 to Mark Smith, to retire all of the outstanding balance on
the Smith Loan. On April 30, 2021 and May 4, 2021, The Company repaid $250 and $250, respectively, representing partial repayments
on the Smith Credit Facility. Each of these loan repayments utilized proceeds from the exercise of warrants. Additionally, on May
4, 2021, the Company repaid $138 to Mark Smith, representing accrued interest on the Smith Loan through the repayment date noted
above and accrued interest on the Smith Credit Facility through April 30, 2021.
On May 10, 2021, the Company
closed a non-brokered private placement (the “April 2021 Private Placement”) of units of the Company (“Units”).
A total of 4,334,157 Units were issued at a price per Unit of C$1.43, for total gross proceeds to the Company of approximately
C$6.2 million. Each Unit issued pursuant to the April 2021 Private Placement consisted of one Common Share and one Warrant. Each
Warrant entitles the holder thereof to purchase one additional Common Share at a price of C$1.63 for a period of two years from
the date of issuance. Proceeds of the April 2021 Private Placement will be used for continued advancement of the Company’s
Elk Creek Superalloy Materials Project, including ongoing detailed engineering efforts, conducting technical assessments of potentially
adding rare earth products to the planned product offering, and for working capital and general corporate purposes.
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 and nine months ended March 31, 2021, 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 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 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 changes in economic valuations of the Elk Creek Project, such as net present value calculations, changes or disruptions
in the securities markets;
|
|
●
|
risks
related to our history of losses;
|
|
●
|
risks
related to cost increases for our exploration and, if warranted, development projects;
|
|
●
|
risks
related to feasibility study results;
|
|
●
|
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 and reserves;
|
|
●
|
risks
related to changes in mineral resource and reserve estimates;
|
|
●
|
risks
related to differences in U.S. 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 managing and treating 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 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 the need for resilience in the face of potential impacts from climate change;
|
|
●
|
risks
related to a disruption in, or failure of, our information technology (“IT”) systems, including those related
to cybersecurity;
|
|
●
|
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 the U.S. Internal Revenue Code of 1986,
as amended;
|
|
●
|
risks
related to our Common Shares, including price volatility, lack of dividend payments, dilution and penny stock rules;
|
|
●
|
risks
related to our status as an “emerging growth company” and the impact of related reduced reporting requirements
on our ability to attract investors; and
|
|
●
|
Risks
related to the effects of the COVID-19 pandemic on our business plans, financial condition and liquidity.
|
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 for the fiscal year ended June 30, 2020, 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.
National
Instrument 43-101 Compliance
Scott
Honan, M.Sc., SME-RM, a qualified person as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects
(“NI 43-101”), has supervised the preparation of the scientific and technical information that forms the basis for
the Elk Creek Project disclosure in this Quarterly Report on Form 10-Q and has approved the disclosure in this Quarterly Report
on Form 10-Q related thereto. Mr. Honan is not independent of the Company, as he is the Chief Operating Officer. Additional information
on the updated Feasibility Study for the Elk Creek Project (the “2019 Feasibility Study”) is available in our NI 43-101
Technical Report, issued May 29, 2019, which is available under NioCorp’s profile on the Canadian Administrators website
at www.sedar.com and on our website at www.niocorp.com/wp-content/uploads/180001_FINAL_43-101_FS_NioCorp_AS_FILED.pdf.
Company
Overview
NioCorp
is developing the Elk Creek Project, located in southeast Nebraska. The Elk Creek Project is an advanced Niobium (“Nb”)/Scandium
(“Sc”)/Titanium (“Ti”) exploration 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.
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, construction, commissioning, and operation of the Elk Creek Project.
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, 2020,
this being the last day of our most recently completed 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 $1.07 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, as defined in Rule 405 under
the Exchange Act. 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 our first sale of Common Shares 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 JOBS 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 Exchange Act. Such sections are described below:
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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.
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Sections
14A(a) and (b) of the Exchange Act, implemented by Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection
Act of 2010 (the “Dodd-Frank Act”), require companies to hold shareholder advisory votes on executive compensation
and golden parachute compensation.
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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.
COVID-19
In
December 2019, COVID-19 was identified in Wuhan, China, and has since spread to other countries, including the United States.
In March 2020, the World Health Organization characterized COVID-19 as a pandemic. Several countries, including the United States,
continue to take steps to restrict travel, temporarily close businesses and issue quarantine orders, and it remains unclear how
long currently enacted measures will remain in place. COVID-19 vaccination programs started in the United States in December 2020
and currently over one-third of the populations of both Colorado and Nebraska are fully vaccinated. As a result of the COVID-19
pandemic, the Company is following, and will continue to follow, social distancing, health and safety protocol, business-related
social gathering restrictions, and other similar guidelines promulgated by both Colorado and Nebraska governmental officials.
On
April 17, 2020, NioCorp’s subsidiary, Elk Creek Resources Corp., received a U.S. Small Business Administration Loan (the
“SBA Loan”) from American National Bank, pursuant to the Paycheck Protection Program (the “PPP”) established
under the Coronavirus Aid, Relief, and Economic Security Act, commonly referred to as the CARES Act, in the amount of $196. Under
the terms of the SBA Loan, the Company may be eligible for full or partial loan forgiveness. The unforgiven portion of the SBA
Loan is payable over two years at an annual interest rate of 1%, with a deferral of payments for the first six months. The Company
used the proceeds for purposes consistent with the PPP.
On
October 27, 2020, the Company applied for loan forgiveness of $186, comprising the initial SBA Loan balance less $10 representing
an Economic Injury Disaster Loan Advance grant (the “EIDL advance”) received by the Company in April 2020. On November
18, 2020, the Company was notified that the $186 loan forgiveness request had been approved.
On
December 21, 2020, the U.S. Congress passed the Consolidated Appropriations Act, 2021 (the “Act”), which provided
additional COVID-19 relief legislation as well as government funding and other bills. The Act removes the previous requirement
that PPP borrowers deduct the amount of any EIDL advance from their PPP forgiveness amount. The SBA released Procedural Notice
5000-20075, effective January 8, 2021, stating that the SBA will no longer deduct EIDL Advances from forgiveness payments remitted
to PPP lenders. Accordingly, the Company recorded a gain in other income in the consolidated statement of operations for the remaining
$10 of the SBA Loan.
The
COVID-19 pandemic continues to create uncertainty with regards to overall project funding timelines and has heightened the risk
that we may be unable to secure sufficient additional capital, including but not limited to equity and debt offerings, to fund
future expenditures or to maintain our liquidity. It is also possible that the COVID-19 pandemic could further adversely affect
our business plans, results of operations, financial condition or liquidity in the future. The impact of the COVID-19 pandemic
is fluid and continues to evolve, and therefore, we cannot currently predict the extent to which our business plans, results of
operations, financial condition or liquidity will ultimately be impacted.
Recent
Corporate Events
On
February 19, 2021, the Company issued to Lind Global Asset Management III, LLC (“Lind III”), an entity managed by
The Lind Partners, a New York-based asset management firm, a convertible security (the “Lind III Convertible Security”)
pursuant to a definitive convertible security funding agreement, dated as of February 16, 2021 (the “Lind Agreement”),
between the Company and Lind III. The Lind III Convertible Security has a face value of $11,700 (representing $10,000 in funding
plus an closed an implied 8.5% interest rate per annum for the term of the Lind III Convertible Security). After deducting a $350
commitment fee as set forth in the Lind Agreement, NioCorp received net proceeds of $9,650 from the funding of the Lind III Convertible
Security. The Company intends to use the proceeds from the funding of the Lind III Convertible Security to pay the exercise price
under an option-to-purchase agreement on a key land parcel associated with the Company’s Elk Creek Project, as discussed
below under “Elk Creek Project Update,” as well as for general corporate purposes.
The
Lind III Convertible Security has a term of (i) 24 months or (ii) 30 calendar days after the date on which the face value of the
Lind III Convertible Security is nil due to such amount having been fully converted and/or fully repaid (including with any applicable
premium) in accordance with the terms of the Lind Agreement, whichever is earlier. The Lind III Convertible Security constitutes
the direct, general and unconditional obligation of the Company and ranks pari-passu with the Company’s other indebtedness.
The Lind III Convertible Security is guaranteed on a secured basis by 0896800 B.C. Ltd., a wholly-owned subsidiary of the Company
(“0896800”), and Elk Creek Resources Corp., a private Nebraska corporation and wholly-owned subsidiary of 0896800
(“ECRC”).
The
Lind III Convertible Security is secured by all of the assets and property of the Company and 0896800, including all of the issued
and outstanding shares of 0896800 pledged by the Company and all of the issued and outstanding shares of ECRC pledged by 0896800,
and certain real property and fixtures of ECRC. The liens securing the Lind III Convertible Security rank pari-passu with the
liens securing: i) the loan with Mark Smith, President, Chief Executive Officer (“CEO”) and Executive Chairman of
NioCorp (the “Smith Loan”), pursuant to the Loan Agreement, dated June 17, 2015, by and between the Company and Mr.
Smith, as amended from time to time; and ii) a non-revolving credit facility (the “Smith Credit Facility”) with a
limit of $3,500 with Mr. Smith, pursuant to the Credit Facility Agreement, dated January 16, 2017, between the Company and Mr.
Smith, as amended from time to time. The liens securing the Lind III Convertible Security rank senior to the liens securing the
Smith Loan and the Smith Credit Facility on any amount that is owed by the Company to Mr. Smith in excess of $4,000.
Pursuant
to the Lind Agreement, Lind III is entitled to convert the Lind III Convertible Security into common shares of the Company (“Common
Shares”) in monthly installments over its term at a price per Common Share equal to 85% of the volume-weighted average price
Common Shares on the Toronto Stock Exchange (“TSX”) for the five trading days immediately preceding to the date on
which Lind III provides notice to the Company of its election to convert. Subject to certain exceptions, the Lind Agreement contains
restrictions on how much of the Lind III Convertible Security may be converted in any particular month. The Lind Agreement also
provides NioCorp with the option to buy back the remaining face amount of the Lind III Convertible Security in cash at any time;
provided that, if the Company exercises such option, Lind III will have the option to convert up to 33.33% of the remaining face
amount into Common Shares at the price described above. In addition, Lind III is entitled to accelerate its conversion right to
the full amount of the face value of the Lind III Convertible Security or demand repayment thereof in cash upon the occurrence
of an event of default and other designated events described in the Lind Agreement.
On
February 19, 2021, in connection with the funding and issuance of the Lind III Convertible Security, the Company issued 8,558,000
Common Share purchase warrants, exercisable at a price per Common Share of C$0.97, expiring February 19, 2025 (the “Lind
III Warrants”), to Lind III pursuant to the Lind Agreement.
The
Lind III Convertible Security and the Lind III Warrants were issued pursuant to the exemption from the registration requirements
of the Securities Act provided by Section 4(a)(2) thereof based upon the representations and warranties of Lind III in the Lind
Agreement.
On
April 30, 2021, the Company repaid $1,000 to Mark Smith, to retire all of the outstanding balance on the Smith Loan. On April
30, 2021 and May 4, 2021, The Company repaid $250 and $250, respectively, representing partial repayments on the Smith Credit
Facility. Each of these loan repayments utilized proceeds from the exercise of warrants. Additionally, on May 4, 2021, the Company
repaid $138 to Mark Smith, representing accrued interest on the Smith Loan through the repayment date noted above and accrued
interest on the Smith Credit Facility through April 30, 2021.
On May 10, 2021, the Company closed a non-brokered private placement (the “April 2021 Private
Placement”) of units of the Company (“Units”). A total of 4,334,157 Units were issued at a price per Unit of
C$1.43, for total gross proceeds to the Company of approximately
C$6.2 million. Each Unit issued pursuant to the April 2021 Private Placement consisted of one Common Share and one Warrant. Each
Warrant entitles the holder thereof to purchase one additional Common Share at a price of C$1.63 for a period of two years from
the date of issuance. Proceeds of the April 2021 Private Placement will be used for continued advancement of the Company’s
Elk Creek Superalloy Materials Project, including ongoing detailed engineering efforts, conducting technical assessments of potentially
adding rare earth products to the planned product offering, and for working capital and general corporate purposes.
Elk
Creek Project Update
On
February 22, 2021, the Company announced that it formally exercised its option to purchase two parcels of land and associated
rights in Johnson County, Nebraska associated with the Company’s Elk Creek Project, pursuant to the Amended and Restated
Option to Purchase, dated as of April 29, 2020 (the “Option Agreement”), between Beverly J. Beethe and ECRC. On April
23, 2021, ECRC formally exercised and closed on the Option Agreement. Pursuant to the terms of the Option Agreement, the Owner
sold, transferred, conveyed and assigned all of her rights, privileges, title and interest in and to the real property to ECRC,
including any associated oil, gas and mineral rights. The Option Agreement provides for a purchase price calculated based on the
appraised value per acre of the parcels of land, the mineral rights and the structures erected on the land. The purchase price
was approximately $6.2 million.
On
February 23, 2021, the Company announced that it has signed a contract with Cementation USA, Inc, part of the Cementation Americas
Group (“Cementation”), a leading global underground mine contracting and engineering company, to continue advancing
detailed engineering work associated with the Elk Creek Project. Under the contract, Cementation will conduct an evaluation of
the current design for the Elk Creek Project’s underground mine and prepare a detailed cost estimate for the final detailed
engineering that would be required to bring the mine design to “Issued for Construction” status. As previously announced
by NioCorp, Cementation has been selected as the lead Engineering, Procurement, and Construction contractor for the underground
aspects of the Elk Creek Project. NioCorp expects to engage Cementation, if and when additional financing becomes available, to
undertake Phase 2 of the contract, which involves completion of the detailed engineering for the mine.
On March 2, 2021, the Company announced that it launched a review of the economic potential of expanding its currently planned
product suite from the Elk Creek Project to also include rare earth products. We currently plan to produce niobium, scandium,
and titanium at the Elk Creek Project once project financing is secured and the Elk Creek Project is operational, and any rare
earth products that might be produced would be additional to our currently planned products.
The
Company’s review of previously collected data on rare earth content comes in response to growing interest by governments
and industrial consumers around the world for additional sources of rare earths beyond current suppliers. As noted in more detail
below, additional test work is needed to establish a means of recovering and extracting rare earths into saleable products.
The
Company has completed a comprehensive geologic and metallurgical evaluation of all of the rare earth data associated with the
Elk Creek Project. Of the 20,364 assay results in the Elk Creek database, 13,287 (65%) contain a complete suite of analytical
data for all commercial rare earth elements. Included within this dataset are 661 assays where the Total Rare Earth Oxide (“TREO”)
assay results are greater than one percent.
Our
current plan to extract and purify niobium, scandium, and titanium from ore that may be produced by the Elk Creek Project involves
putting these critical minerals into solution. As part of that process, rare earth elements would be simultaneously put into solution.
Among the factors NioCorp will now consider as part of its overall plan to move the Elk Creek Project from the exploration stage
to the development stage, and ultimately, the production stage, subject to securing additional financing, is the economic potential
for additional processing of the solubilized rare earths into commercial rare earth products.
Other
Activities
Our
long-term financing efforts continued during the quarter ended March 31, 2021. However, as noted above under “COVID-19,”
the COVID-19 pandemic has created uncertainty and continues to impact processes related to the Company’s efforts to
obtain project financing. As funds become available through the Company’s fundraising efforts, we expect to undertake the
following activities:
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Continuation
of the Company’s efforts to secure federal, state and local permits;
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Continued
evaluation of the potential to produce rare earth products
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Negotiation
and completion of engineering, procurement and construction agreements;
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Completion
of the final detailed engineering for the underground portion of the Elk Creek Project;
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Initiation
and completion of the final detailed engineering for surface project facilities;
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Construction
of natural gas and electrical infrastructure under existing agreements to serve the Elk Creek Project site;
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Completion
of water supply agreements and related infrastructure to deliver fresh water to the project site;
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Initiation
of revised mine groundwater investigation and control activities; and
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Initiation
of long-lead equipment procurement activities.
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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.
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For the Three Months Ended March 31,
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For the Nine Months Ended March 31,
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2021
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2020
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2021
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2020
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Operating expenses
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Employee-related costs
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$
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327
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$
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341
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$
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1,332
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$
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1,040
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Professional fees
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83
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41
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276
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226
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Exploration expenditures
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297
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294
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711
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971
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Other operating expenses
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138
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141
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802
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473
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Total operating expenses
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845
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817
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3,121
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2,710
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Other income
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(22
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)
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—
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(208
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)
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—
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Loss on extinguishment
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—
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—
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163
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—
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Change in financial instrument fair value
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(60
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)
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(49
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)
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(32
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)
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39
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Foreign exchange (gain) loss
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(94
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)
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395
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(497
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)
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359
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Interest expense
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354
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100
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612
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233
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(Gain) loss on equity securities
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(10
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)
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(1
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)
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(12
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)
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2
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Income tax expense
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—
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—
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—
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—
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Net Loss
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$
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1,013
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$
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1,262
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$
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3,147
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$
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3,343
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Nine
months ended March 31, 2021 compared to nine months ended March 31, 2020
Significant
items affecting operating expenses are noted below:
Employee-related
costs increased in 2021 as compared to 2020, primarily due to increased share-based compensation costs, which reflect the
timing of 2021 Option grants, which were fully vested and expensed on the grant date.
Exploration
expenditures decreased in 2021 as compared to 2020, primarily due to the costs incurred in 2020 related to advancing work
to obtain an air construction permit from the State of Nebraska. 2021 expenditures primarily related to the ongoing personnel
costs, as well as general project advancement activities.
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 2021 as compared to 2020 primarily due to 2021 Option grants,
which were fully vested and expensed on the grant date. These costs were partially offset by a decrease in finance-related contract
costs.
Other
significant items impacting the change in the Company’s net loss are noted below:
Other
income for 2021 represents the forgiveness of the Company’s SBA Loan as discussed in Note 6 to the financial statements
included in this Quarterly Report on Form 10-Q, and other minor gains.
Loss
on extinguishment for 2021 represents the loss incurred in connection with the conversion of the Nordmin accounts payable
balance to the one-year Nordmin Convertible Note, as discussed in Note 5 to the financial statements included in this Quarterly
Report on Form 10-Q.
Foreign
exchange (gain) 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, and
the gain during 2021 as compared to a loss in 2020 is due to a decline in the U.S. dollar relative to the Canadian dollar in 2021.
Interest
expense increased in 2021 as compared to 2020 primarily due to the accretion of the Lind III Convertible Security, which began
in February 2021, as well as the timing of 2020 increases in principal amounts outstanding under the non-revolving credit facility
agreement (the “Credit Agreement”) with Mark Smith, President, Chief Executive Officer (“CEO”) and Executive
Chairman of NioCorp.
Three
months ended March 31, 2021 compared to three months ended March 31, 2020
Overall,
the decrease in net loss for the three months ended March 31, 2021, as compared to the same period in 2020, is primarily the result
of the same factors underlying the nine-month changes in foreign exchange (gain) loss and interest expense as discussed above.
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. While the COVID-19 pandemic has created uncertainty with respect
to overall project funding timelines, we believe that we will be able to secure additional private placement financings in the
future, although we cannot predict the timing, size, or pricing of any such financings. 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 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.
As
of March 31, 2021, the Company had cash of $8.6 million and a working capital surplus of $2.9 million, compared to cash of $0.3
million and working capital deficit of $7.7 million on June 30, 2020. The working capital surplus for 2021 is due to the timing
of cash inflows from convertible debt arrangements and warrant redemptions to support current operations offset slightly by a
continued effort to reduce outstanding accounts payable balances.
We expect that the Company will operate
at a loss for the foreseeable future. The Company’s current planned operational needs are approximately $9.2 million until
June 30, 2021, inclusive of the purchase of land parcels described above under “Elk Creek Project Update,” as
well as the retirement of the Smith Loan and partial repayment of the Smith Credit Facility discussed above under “Recent
Corporate Events.” In addition to outstanding accounts payable and short-term liabilities, our average monthly expenditures
are approximately $601 per month where approximately $590 is for corporate overhead and estimated costs related to securing financing
necessary for advancement of the Elk Creek Project. Approximately $11 per month is planned for expenditures relating to the advancement
of Elk Creek Project by NioCorp’s wholly owned subsidiary, Elk Creek Resources Corp. 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 has sufficient cash, including net proceeds from the April 2021 Private
Placement, to continue to fund basic operations for the next twelve months. As additional funds are secured, we will 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 $nil until June 30, 2021. 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, 2021, 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.
We
currently have no further funding commitments or arrangements for additional financing at this time (other than the April 2021
Private Placement and 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 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. 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 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.
The audit opinion and notes that accompany our financial statements for the year ended June 30, 2020 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 an exploration stage company
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
continued spread of COVID-19 has resulted in business travel restrictions and capital market disruptions, and this has had an adverse
impact on our ability to obtain financing, development plans, results of operations, financial position, and cash flows during
the current fiscal year. 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 nine months ended March 31, 2021, the Company’s operating activities consumed $3.6 million of cash (2020: $2.2 million).
The cash used in operating activities for the nine months ended March 31, 2021 reflects the Company’s funding of losses
of $3.1 million, partially offset by share-based compensation charges, other non-cash transactions and a $1.0 million decrease
in accounts payable and accrued liabilities. Overall, operational outflows during the nine months ended March 31, 2021 increased
from the corresponding period of 2020 due to the continued focus on paying down our outstanding accounts payable. 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 $11.9 million during the nine months ended March 31, 2021, as compared to $1.9 million during the corresponding period
in 2020, primarily reflecting the timing of the Lind III Convertible Security funding in February 2021, as well as warrant and
option exercises and related party debt drawdowns initiated during the comparative periods.
Cash
Flow Considerations
As
noted above under “COVID-19,” the COVID-19 pandemic has created uncertainty with respect to overall project
funding timelines. 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.
Contractual
Obligations
There have been no material changes to our contractual obligations discussed in “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” under the heading “Contractual Obligations”
as of June 30, 2020, in our Annual Report on Form 10-K for the fiscal year ended June 30, 2020, other than (i) the signing of the
three-year corporate office lease extension; (ii) the conversion of the remaining balance under the convertible security held by
Lind of $38 into 64,298 Common Shares on July 9, 2020; (iii) the conversion of $50 of the Company’s convertible promissory
notes into 67,695 Common Shares on the maturity date, October 14, 2020; (iv) the forgiveness of $186 of the SBA Loan on November
18, 2020; (v) the set-off of accounts payable relating to past services provided by Nordmin with the issuance of the Nordmin Convertible
Note in the principal amount of $1,872 on December 18, 2020; (vi) the funding of the Lind III Convertible Security on February
19, 2021, resulting in net proceeds of $9,650; (vii) the conversion
of the remaining $750 of the Company’s convertible promissory notes into 976,921 Common Shares on March 16, 2021; and (viii)
repayment of the outstanding Smith Loan of $1,000 on April 29, 2021 and $250 reductions to the Smith Credit Facility on April 29,
2021 and May 4, 2021, respectively. Effective December 14, 2020, the maturity date Smith Credit Facility was extended to December
15, 2021.
Off-Balance
Sheet Arrangements
The
Company has no off-balance sheet arrangements.
Critical
Accounting Policies
There
have been no material changes in our critical accounting policies discussed in “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” under the heading “Critical Accounting Policies” as of June
30, 2020, in our Annual Report on Form 10-K for the fiscal year ended June 30, 2020.
Certain
U.S. Federal Income Tax Considerations
The
Company has been 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 and expects to continue to be a PFIC in the future. 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 for the fiscal year ended June 30, 2020, under the heading “Risks Related
to the Common Shares.”