As filed with the Securities and Exchange Commission on March
14, 2023 |
Registration No.
333- |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
NioCorp Developments Ltd.
(Exact name of registrant as specified in its charter)
British Columbia, Canada |
|
98-1262185 |
(State or other jurisdiction
of incorporation or organization) |
|
(IRS Employer Identification
No.) |
7000 South Yosemite Street, Suite 115
Centennial, Colorado 80112
Tel: (855) 264-6267
(Address, including zip code, and telephone number, including area
code, of registrant’s principal executive offices)
CT Corporation System
111 Eighth Avenue
13th Floor
New York, New York 10011
Tel: (800) 624-0909
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies of all communications, including communications sent to
agent for service, should be sent to:
|
Christopher M. Kelly
Joel T. May
Andrew C. Thomas
Jones Day
1221 Peachtree Street, N.E.
Suite 400
Atlanta, Georgia 30361
(404) 581-8967
|
Bob Wooder
Kyle Misewich
Blake, Cassels & Graydon LLP
595 Burrard Street
Suite 2600
Vancouver, British Columbia
V7X 1L3
|
|
Approximate date of commencement of proposed sale to the
public:
From time to time after the effectiveness of this registration
statement.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please
check the following box. ☐
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box. ☒
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, please check the following box and
list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
☐
If this Form is a registration statement pursuant to General
Instruction I.D. or a post-effective amendment thereto that shall
become effective upon filing with the Commission pursuant to Rule
462(e) under the Securities Act, check the following box.
☐
If this Form is a post-effective amendment to a registration
statement filed pursuant to General Instruction I.D. filed to
register additional securities or additional classes of securities
pursuant to Rule 413(b) under the Securities Act, check the
following box. ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company” and “emerging growth company” in Rule
12b-2 of the Exchange Act:
Large accelerated filer |
☐ |
Accelerated filer |
☐ |
Non-accelerated filer |
☒ |
Smaller
reporting company |
☒ |
|
|
Emerging
growth company |
☐ |
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 7(a)(2)(B) of the Securities
Act. ☐
The registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date until
the registrant shall file a further amendment which specifically
states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of
1933 or until this registration statement shall become effective on
such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
SUBJECT TO COMPLETION, DATED MARCH 14, 2023
The information in this prospectus is not complete and may be
changed. These securities may not be sold until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities
and it is not soliciting an offer to buy these securities in any
jurisdiction where the offer or sale is not permitted.
PROSPECTUS

NioCorp Developments Ltd.
70,771,658 Common Shares
This prospectus relates to the offer and sale from time to time of
up to 70,771,658 of our common shares, without par value (“Common
Shares”), consisting of (i) up to 679,890 Commitment Shares (as
defined below) and (ii) up to 70,091,768 Advance Shares (as defined
below), by YA II PN, Ltd., a Cayman Islands exempt limited
partnership (“YA” or the “Selling Shareholder”). YA is a fund
managed by Yorkville Advisors Global, LP.
The Common Shares being offered by the Selling Shareholder have
been and may be issued pursuant to the Standby Equity Purchase
Agreement, dated January 26, 2023, that we entered into with YA
(the “Purchase Agreement”). We are not selling any securities under
this prospectus and will not receive any of the proceeds from the
sale of Common Shares by the Selling Shareholder. However, we may
receive up to $65.0 million in aggregate gross proceeds from sales
of Common Shares to YA that we may make under the Purchase
Agreement, from time to time after the date of this prospectus and
during the Commitment Period (as defined herein) (the “Advance
Shares”), subject to certain limitations and the satisfaction of
certain conditions. Pursuant to the Purchase Agreement, we will
issue $650,000 of Common Shares (the “Commitment Shares”) to YA as
consideration for its irrevocable commitment to purchase Advance
Shares under the Purchase Agreement. The Advance Shares that may be
offered pursuant to this prospectus would be purchased by YA
pursuant to the Purchase Agreement at a purchase price equal to 97%
of the daily volume-weighted average price of our Common Shares on
the Principal U.S. Market (as defined herein) as reported by
Bloomberg Financial Markets (or, if not available, a similar
service provider of national recognized standing) (“VWAP”) during
the applicable pricing period, which is a period during a single
trading day or a period of three consecutive trading days, at the
Company’s option and subject to certain restrictions, in each case,
defined based on when an Advance Notice (as defined herein) is
submitted, subject to certain limitations.
See the section titled “The YA Transaction” for a description of
the transaction contemplated by the Purchase Agreement and the
section titled “Selling Shareholder” for additional information
regarding YA.
The Selling Shareholder may sell the Common Shares included in this
prospectus in a number of different ways and at varying prices. We
provide more information about how the Selling Shareholder may sell
the Common Shares in the section entitled “Plan of Distribution.”
The Selling Shareholder is an “underwriter” within the meaning of
Section 2(a)(11) of the Securities Act of 1933, as amended (the
“Securities Act”).
The Selling Shareholder will pay all brokerage fees and commissions
and similar expenses in connection with the offer and sale of the
Common Shares by the Selling Shareholder pursuant to this
prospectus. We will pay the expenses (except brokerage fees and
commissions and similar expenses) incurred in registering under the
Securities Act the offer and sale of the Common Shares included in
this prospectus by the Selling Shareholder. See “Plan of
Distribution.”
Our Common Shares trade on the Toronto Stock Exchange (the “TSX”)
under the symbol “NB,” and on the OTC Markets trading platform
under the symbol “NIOBF.” We anticipate that, following the Closing
Date (as defined herein), the Common Shares will trade on the
Nasdaq Stock Market (“Nasdaq”) under the symbol “NB.” Our principal
executive office is located at 7000 South Yosemite Street, Suite
115, Centennial, Colorado 80112, and our telephone number is (855)
264-6267.
Investing in our Common Shares involves a high degree of risk.
You should review carefully the risks and uncertainties referenced
under the heading “Risk Factors” beginning on page 9 of this
prospectus.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
The date of this prospectus
is ,
2023.
Table of
Contents
Page
ABOUT THIS PROSPECTUS |
|
1 |
|
WHERE YOU CAN FIND MORE INFORMATION |
|
2 |
|
INCORPORATION OF DOCUMENTS BY REFERENCE |
|
3 |
|
SUMMARY |
|
4 |
|
SECURITIES OFFERED |
|
8 |
|
RISK FACTORS |
|
9 |
|
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS |
|
13 |
|
USE OF PROCEEDS |
|
16 |
|
DETERMINATION OF OFFERING PRICE |
|
17 |
|
SELLING SHAREHOLDER |
|
18 |
|
THE YA TRANSACTION |
|
20 |
|
Description of Capital Stock |
|
25 |
|
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS |
|
30 |
|
Certain Canadian federal Income Tax Considerations for U.S.
Residents |
|
38 |
|
PLAN OF DISTRIBUTION |
|
40 |
|
LEGAL MATTERS |
|
42 |
|
EXPERTS |
|
42 |
|
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-3
that we filed with the Securities and Exchange Commission (the
“SEC”) using a “shelf” registration process. The Selling
Shareholder may, from time to time, sell the Common Shares
described in this prospectus.
You should rely only on the information provided in this
prospectus, as well as the information incorporated by reference
into this prospectus and any applicable prospectus supplement.
Neither we nor the Selling Shareholder have authorized anyone to
provide you with different information. Neither we nor the Selling
Shareholder have authorized anyone to provide you with any
information or to make any representations other than those
contained in this prospectus or any applicable prospectus
supplement or any free writing prospectuses prepared by or on
behalf of us or to which we have referred you. Neither we nor the
Selling Shareholder take responsibility for, and can provide no
assurance as to the reliability of, any other information that
others may give you. You should not assume that the information in
this prospectus or any applicable prospectus supplement is accurate
as of any date other than the date of the applicable document.
Since the date of this prospectus and the documents incorporated by
reference into this prospectus, our business, financial condition,
results of operations and prospects may have changed. Neither we
nor the Selling Shareholder will make an offer to sell these
securities in any jurisdiction where the offer or sale is not
permitted.
We may also provide a prospectus supplement or post-effective
amendment to the registration statement of which this prospectus is
a part to add information to, or update or change information
contained in, this prospectus and the registration statement of
which this prospectus is a part. You should read this prospectus
and any applicable prospectus supplement or post-effective
amendment to the registration statement of which this prospectus is
a part together with the additional information to which we refer
you in the sections of this prospectus entitled “Where You Can Find
More Information” and “Incorporation of Documents by
Reference.”
Unless we state otherwise or the context otherwise requires, the
terms “we,” “us,” “our,” “our business,” “NioCorp,” “the Company”
and similar references refer to NioCorp Developments Ltd. and its
consolidated subsidiaries.
This prospectus contains our registered and unregistered trademarks
and service marks, as well as trademarks and service marks of third
parties. Solely for convenience, these trademarks and service marks
are referenced without the ®, ™ or similar symbols, but
such references are not intended to indicate, in anyway, that we
will not assert, to the fullest extent under applicable law, our
rights to these trademarks and service marks. All brand names,
trademarks and service marks appearing in this prospectus are the
property of their respective holders.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement on Form S-3
that we filed with the SEC under the Securities Act and does not
contain all the information set forth or incorporated by reference
in the registration statement. Whenever a reference is made in this
prospectus to any of our contracts, agreements or other documents,
the reference may not be complete and you should refer to the
exhibits that are a part of the registration statement of which
this prospectus is a part or the exhibits to the reports or other
documents incorporated by reference into this prospectus for a copy
of such contract, agreement or other document. You may obtain
copies of the registration statement and its exhibits via the SEC’s
EDGAR database.
We file annual, quarterly and current reports, proxy statements and
other information with the SEC under the Securities Exchange Act of
1934, as amended (the “Exchange Act”). The SEC maintains a website
that contains reports, proxy and information statements and other
information regarding issuers, including us, that file
electronically with the SEC. You may obtain documents that we file
with the SEC at www.sec.gov.
We make available, free of charge, on our website at
www.niocorp.com, our annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, proxy statements
and amendments to those reports and statements as soon as
reasonably practicable after they are filed with the SEC. We do not
incorporate the information on or accessible through any website
into this prospectus or any prospectus supplement, and you should
not consider any information on, or that can be accessed through,
any website as part of this prospectus or any prospectus
supplement. Our website address and the SEC’s website address are
included in this prospectus as inactive textual references
only.
INCORPORATION OF DOCUMENTS BY REFERENCE
SEC rules permit us to incorporate information by reference into
this prospectus and any applicable prospectus supplement. This
means that we can disclose important information to you by
referring you to another document filed separately with the SEC.
The information incorporated by reference is considered to be part
of this prospectus and any applicable prospectus supplement, except
for information superseded by information contained in this
prospectus or the applicable prospectus supplement itself or in any
subsequently filed incorporated document. This prospectus and any
applicable prospectus supplement incorporate by reference the
documents set forth below that we have previously filed with the
SEC, other than information in such documents that is deemed to be
furnished and not filed. These documents contain important
information about us and our business and financial condition. Any
report or information within any of the documents referenced below
that is furnished, but not filed, shall not be incorporated by
reference into this prospectus:
|
· |
our Annual Report on Form 10-K for
the fiscal year ended June 30, 2022, filed with the SEC on
September 6, 2022, as amended by Amendment No. 1 to our Annual
Report on Form 10-K/A for the fiscal year ended June 30, 2022,
filed with the SEC on October 31, 2022; |
|
· |
our Quarterly Reports on Form 10-Q
for the quarter ended September 30, 2022, filed with the SEC on
November 14, 2022, and for the quarter ended December 31, 2022,
filed with the SEC on February 13, 2023; |
|
· |
our Current Reports on Form 8-K,
filed with the SEC on September 29, 2022, October 21, 2022,
December 15, 2022, January 27, 2023 (Items 1.01, 2.03, 3.02 and
9.01 (Exhibits 4.1, 4.2, 4.3, 4.4 and 10.1) only), February 13,
2023, February 24, 2023, February 28, 2023, March 1, 2023, March 6,
2023, March 10, 2023 and March 14, 2023; and |
|
· |
a description of our Common Shares,
included as Exhibit 4.15 to our Annual Report on Form 10-K for the
fiscal year ended June 30, 2022, filed with the SEC on September 6,
2022, and any subsequently filed amendments and reports filed for
the purpose of updating that description. |
We also incorporate by reference any future filings made by us with
the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
(excluding any information furnished to, rather than filed with,
the SEC), including after the date of the initial registration
statement of which this prospectus is a part and prior to
effectiveness of the registration statement, and after
effectiveness of the registration statement and prior to the
termination of the offering of the securities made by this
prospectus. Information in such future filings updates and
supplements the information provided in this prospectus. Any
statements in any such future filings will automatically be deemed
to modify and supersede any information in any document we
previously filed with the SEC that is incorporated or deemed to be
incorporated herein by reference to the extent that statements in
the later filed document modify or replace such earlier
statements.
You may request a copy of these filings, at no cost, by writing or
calling us at the following address or telephone number below:
NioCorp Developments Ltd.
7000 South Yosemite Street, Suite 115
Centennial, Colorado 80112
Phone: (855) 264-6267
Those copies will not include exhibits, unless the exhibits have
specifically been incorporated by reference in this document or you
specifically request them.
SUMMARY
This summary highlights selected information appearing in this
prospectus. Because it is a summary, it may not contain all of the
information that may be important to you. To understand this
offering fully, you should read this entire prospectus carefully,
including the information set forth in the section entitled “Risk
Factors” contained in this prospectus and under similar headings in
the other documents that are incorporated by reference into this
prospectus. You should also carefully read the information
incorporated by reference into this prospectus, including our
consolidated financial statements and related notes and the
exhibits to the registration statement of which this prospectus is
a part, before making an investment decision. This prospectus
includes forward-looking statements that involve risks and
uncertainties. See “Cautionary Note Regarding Forward-Looking
Statements.”
NioCorp Developments Ltd.
NioCorp is a mineral exploration company engaged in the
acquisition, exploration, and development of mineral properties.
NioCorp, through its indirect, wholly owned subsidiary, Elk Creek
Resources Corporation, a Nebraska corporation (“ECRC”), is
developing a superalloy materials project that, if and when
developed, will produce niobium, scandium, and titanium products.
Known as the “Elk Creek Project,” it is located near Elk Creek,
Nebraska, in the southeast portion of the state.
|
· |
Niobium is used to produce various
superalloys that are extensively used in high performance aircraft
and jet turbines. It also is used in high-strength low-alloy steel,
a stronger steel used in automobiles, bridges, structural systems,
buildings, pipelines, and other applications that generally enables
those applications to be stronger and lighter in mass. This
“lightweighting” benefit often results in environmental benefits,
including reduced fuel consumption and material usage, which can
result in fewer air emissions. |
|
· |
Scandium can be combined with aluminum
to make super-high-performance alloys with increased strength and
improved corrosion resistance. Scandium also is a critical
component of advanced solid oxide fuel cells, an environmentally
preferred technology for high-reliability, distributed electricity
generation. |
|
· |
Titanium is a component of various
superalloys and other applications that are used for aerospace
applications, weapons systems, protective armor, medical implants
and many others. It also is used in pigments for paper, paint, and
plastics. |
During fiscal year 2022, the Company also advanced work on the
determination of the economic potential of expanding its currently
planned product suite from the Elk Creek Project to include Rare
Earth Elements (“REEs”).
Our primary business strategy is to advance our Elk Creek Project
to commercial production. We are focused on obtaining additional
funds to carry out our near-term planned work programs associated
with securing the project financing necessary to complete mine
development and construction of the Elk Creek Project.
Background
On September 25, 2022, the Company, GX Acquisition Corp. II, a
Delaware corporation (“GXII”), and Big Red Merger Sub Ltd, a
Delaware corporation incorporated in September 2022, and a direct,
wholly owned subsidiary of the Company, entered into a business
combination agreement (the “Business Combination Agreement”).
Pursuant to the Business Combination Agreement, as the result of a
series of transactions, GXII will become a subsidiary of the
Company (as successor by merger to ECRC), with the pre-combination
public shareholders of GXII receiving Common Shares based on a
fixed exchange ratio of 11.1829212 (the “Exchange Ratio”) Common
Shares for each GXII Class A common share held and not redeemed,
and the GXII founders receiving shares in GXII (as successor by
merger to ECRC) based on the Exchange Ratio. Pursuant to the
Business Combination Agreement, after closing of the Transactions
(as defined below) (the “Closing”), the GXII founders will have the
right to exchange such shares for Common Shares on a one-for-one
basis under certain conditions. Pursuant to the Business
Combination Agreement, the Company will also assume the obligations
under the issued and outstanding GXII warrants, which will be
converted into warrants to purchase Common Shares following the
Closing. The Business Combination Agreement contemplates that the
Company will undertake a reverse stock split of the Common Shares
at the time of the Closing in connection with an expected
cross-listing to Nasdaq. In addition, pursuant to the Business
Combination Agreement, post-Closing, the Company’s Board of
Directors will include two directors from pre-
combination GXII. The transactions contemplated by the Business
Combination Agreement and the ancillary agreements thereto are
referred to collectively as the “Transactions.”
The proposed Transactions are expected to close in the first
calendar quarter of 2023, subject to the satisfaction or waiver of
certain customary closing conditions contained in the Business
Combination Agreement, including, among other things, (i) obtaining
required approvals of the Transactions and related matters by the
respective shareholders of NioCorp and GXII, (ii) the effectiveness
of the registration statement on Form S-4 that the Company
originally filed on November 7, 2022, and amended on December 22,
2022, January 17, 2023, January 31, 2023, and February 6, 2023, and
was declared effective by the SEC on February 8, 2023, (iii)
receipt of approval for listing on Nasdaq of the Common Shares to
be issued in connection with the Transactions, (iv) receipt of
approval for listing on Nasdaq of the public NioCorp Assumed
Warrants (as defined herein), (v) receipt of approval from the TSX
with respect to the issuance and listing of the Common Shares
issuable in connection with the Transactions, (vi) that NioCorp and
its subsidiaries (including GXII, as successor by merger to ECRC)
will have at least $5.000001 million of net tangible assets upon
the consummation of the Transactions, after giving effect to any
redemptions by GXII public stockholders and after payment of
underwriters’ fees or commissions, (vii) that, at the Closing,
NioCorp and its subsidiaries (including GXII, as successor by
merger to ECRC) will have received cash in an amount equal to or
greater than $15.0 million, subject to certain adjustments, and
(viii) the absence of any injunctions enjoining or prohibiting the
consummation of the Business Combination Agreement.
In addition, in connection with the entry into the Business
Combination Agreement, the Company announced the signing of
non-binding letters of intent for two separate financing packages
with Yorkville Advisors Global, LP. On January 26, 2023, the
Company entered into definitive agreements with respect to these
financings, including the Purchase Agreement, as described under
“The YA Transaction,” and a Securities Purchase Agreement, dated
January 26, 2023 (as amended, the “Yorkville Convertible Debt
Financing Agreement”), between the Company and YA.
Pursuant to the Yorkville Convertible Debt Financing Agreement, YA,
and any investor that exercises its contractual right previously
granted by us to participate in the transactions contemplated
thereby (collectively with YA, the “Investors”), will advance an
initial total amount of $9.6 million to NioCorp in consideration of
the issuance by NioCorp to the Investors of $10.0 million aggregate
principal amount of convertible debentures (the “Convertible
Debentures”) at the time of the Closing (the “First Debenture
Closing”), and an additional total amount of $5.76 million to
NioCorp in consideration of the issuance by NioCorp to the
Investors of $6.0 million aggregate principal amount of Convertible
Debentures on a date to be determined at the election of NioCorp,
but which may not be prior to the later to occur of (i) the date of
filing of a registration statement registering the resale by the
Investors of the Common Shares issuable upon conversion of the
Convertible Debentures and the exercise of the related warrants
issuable pursuant to the Yorkville Convertible Debt Financing
Agreement (the “Financing Warrants”) and (ii) the Closing Date.
Corporate Information
Our Common Shares trade on the TSX under the symbol “NB” and on the
OTC Markets trading platform under the symbol “NIOBF.” We
anticipate that following the Closing Date, the Common Shares will
trade on Nasdaq under the symbol “NB.” Our principal executive
office is located at 7000 South Yosemite Street, Suite 115,
Centennial, CO 80112, and our telephone number is (855) 264-6267.
Our website address is www.niocorp.com. This website address
is not intended to be an active link, and information on, or
accessible through, our website is not incorporated by reference
into this prospectus and you should not consider any information
on, or that can be accessed from, our website as part of this
prospectus or any accompanying prospectus supplement.
THE
OFFERING
On January 26, 2023, we entered into the Purchase Agreement with
YA, pursuant to which YA has committed to purchase up to $65.0
million Advance Shares (the “Commitment Amount”), at our direction
from time to time after the date of this prospectus and for a
period commencing upon the date of the Closing (the “Closing Date”)
and ending on the earliest of (i) the first day of the month next
following the 36-month anniversary of the Closing, (ii) the date on
which YA shall have made payment of the full Commitment Amount and
(iii) the date that the Purchase Agreement otherwise terminates in
accordance with its terms (the “Commitment Period”), subject to
certain limitations and the satisfaction of the conditions in the
Purchase Agreement. Pursuant to the terms of the Purchase
Agreement, we will issue $650,000 of Commitment Shares to YA as
consideration for its irrevocable commitment to purchase Advance
Shares under the Purchase Agreement. This prospectus covers the
resale by YA of up to 70,771,658 Common Shares, consisting of (i)
up to 679,890 Commitment Shares and (ii) up to 70,091,768 Advance
Shares. Additionally, we will pay to YA an aggregate fee of
$1,500,000 in cash (the “Cash Fee”), including $500,000 on the
Closing Date and the remainder in installments over a 12-month
period following the Closing Date, provided that, we will have the
right to prepay without penalty all or part of the Cash Fee at any
time.
YA has no right to require us to sell any Advance Shares to YA, but
YA is obligated to make purchases as directed by us, subject to the
satisfaction of conditions set forth in the Purchase Agreement at
each time that we may direct YA to purchase Advance Shares under
the Purchase Agreement (each, an “Advance” and, collectively, the
“Advances”). Actual sales of Advance Shares to YA from time to time
will depend on a variety of factors, including, among others,
market conditions, the trading price of our Common Shares and
determinations by us as to the appropriate sources of funding for
us and our operations.
The net proceeds under the Purchase Agreement to us will depend on
the frequency and prices at which we sell Advance Shares, our
ability to meet the conditions set forth in the Purchase Agreement
and any impacts of the Exchange Cap, the Ownership Limitation
(each, as defined herein), the limitations on the maximum amount of
Advance Shares we may sell pursuant to any one Advance and the
limitations on the number of Advances we may make in any given
calendar month when certain conditions exist, each as discussed
below in the section titled “The YA Transaction.” We expect that
any proceeds received by us from such sales of Advance Shares will
be used for working capital and general corporate purposes,
including to advance our efforts to launch construction of the Elk
Creek Project and move it to commercial operation, and to satisfy
the fees and expenses incurred in connection with the Transactions,
if required.
YA has agreed that, during the term of the Purchase Agreement,
neither YA nor its affiliates will engage in any short sales or
hedging transactions which establish a net short position with
respect to any securities of NioCorp (including our Common Shares),
provided that upon receipt of an Advance Notice, YA may sell
Advance Shares that it is obligated to purchase under such Advance
Notice prior to taking possession of such Advance Shares.
The Purchase Agreement contains customary representations,
warranties, conditions and indemnification obligations of the
parties. The representations, warranties and covenants were made
only for purposes of such agreement and as of specific dates, were
solely for the benefit of the parties to such agreement and may be
subject to limitations agreed upon by the contracting parties.
Unless terminated earlier as provided in the Purchase Agreement,
the Purchase Agreement will automatically terminate following the
expiration of the Commitment Period. We have the right to terminate
the Purchase Agreement at any time, at no cost or penalty, upon
five trading days’ prior written notice to YA, provided that there
are (i) no Advance Notices under which Advance Shares have not yet
been issued and paid for and (ii) no amounts owed to YA pursuant to
the Purchase Agreement, including any remaining installments of the
Cash Fee that have not otherwise been paid as of such date.
There are substantial risks to our shareholders as a result of the
sale and issuance of Common Shares to YA under the Purchase
Agreement. These risks include substantial dilution, significant
declines in our share price and our inability to draw sufficient
funds when needed. See the section entitled “Risk Factors” included
elsewhere in this prospectus. Issuances of our Common Shares under
the Purchase Agreement will not affect the rights or privileges of
our existing shareholders, except that the economic and voting
interests of each of our existing shareholders will be diluted as a
result of any such issuance. Although the number of Common Shares
that our existing shareholders
own
will not decrease, the Common Shares owned by our existing
shareholders will represent a smaller percentage of our total
outstanding Common Shares after any such issuances pursuant to the
Purchase Agreement.
SECURITIES OFFERED
Common Shares Offered by the Selling Shareholder |
Up to 679,890 Commitment Shares, which will be issued to YA within
five days of the Closing Date. We have not and will not receive any
cash proceeds from the issuance of these Commitment Shares. |
|
Up to 70,091,768 Advance Shares we may sell to YA under the
Purchase Agreement from time to time. |
Common Shares Outstanding Prior to this Offering |
282,466,201 Common Shares (as of March 10, 2023). |
Common Shares Outstanding After this Offering |
353,237,859 Common Shares, assuming the issuance of a total of
70,771,658 Common Shares to YA (including 70,091,768 Advance Shares
and 679,890 Commitment Shares). The actual number of Common Shares
outstanding after this offering will vary depending upon the number
of Advance Shares we sell under the Purchase Agreement. |
Use of Proceeds |
We will not receive any proceeds from the sale of Common Shares
included in this prospectus by the Selling Shareholder. We may
receive up to $65.0 million aggregate gross proceeds under the
Purchase Agreement from sales of Advance Shares that we elect to
make to YA pursuant to the Purchase Agreement, if any, from time to
time during the Commitment Period in our sole discretion; although,
the actual amount of proceeds that we may receive cannot be
determined at this time and will depend on the number of Advance
Shares we sell under the Purchase Agreement and market prices at
the times of such sales. We expect that any proceeds that we
receive from sales of Advance Shares to YA under the Purchase
Agreement will be used for working capital and general corporate
purposes, including to advance our efforts to launch construction
of the Elk Creek Project and move it to commercial operation, and
to satisfy the fees and expenses incurred in connection with the
Transactions, if required. See “Use of Proceeds.” |
Market for Common Shares |
Our Common Shares trade on the TSX under the symbol “NB” and on the
OTC Markets trading platform under the symbol “NIOBF.” We
anticipate that, following the Closing Date, the Common Shares will
trade on Nasdaq under the symbol “NB.” |
Risk Factors |
See “Risk Factors” and other information included in this
prospectus for a discussion of factors you should consider before
investing in our securities. |
RISK FACTORS
Investing in our Common Shares involves a high degree of risk.
Before making a decision to invest in our Common Shares, you should
carefully consider the risks described below and under the heading
“Risk Factors” in the applicable prospectus supplement, and
discussed under Part I, Item 1A. “Risk Factors” contained in our
most recent Annual Report on Form 10-K, and Part II, Item 1A. “Risk
Factors” contained in our subsequent Quarterly Reports on Form
10-Q, as well as any amendments thereto, which are incorporated by
reference into this prospectus and the applicable prospectus
supplement in their entirety, together with other information in
this prospectus and the applicable prospectus supplement and the
documents incorporated by reference herein and therein. See the
sections of this prospectus entitled “Where You Can Find More
Information” and “Incorporation of Documents by Reference.”
Additional risks and uncertainties not presently known to us or
that we currently deem immaterial may also affect our business,
financial condition or results of operations. The occurrence of any
of these known or unknown risks might cause you to lose all or part
of your investment in our Common Shares.
Additional Risks Related to this Offering and Our Common Shares
Substantial blocks of our Common Shares may be sold into the market
as a result of the Common Shares issued to YA under the Purchase
Agreement, which may cause the price of our Common Shares to
decline.
The price of our Common Shares could decline if there are
substantial sales of our Common Shares, if there is a large number
of our Common Shares available for sale, or if there is the
perception that these sales could occur.
On January 26, 2023, we entered into the Purchase Agreement with
YA. Pursuant to the Purchase Agreement, we will have the right, but
not the obligation, to sell to YA up to $65.0 million of Advance
Shares, at our request any time during the Commitment Period,
subject to certain limitations and the satisfaction of certain
conditions. Pursuant to the terms of the Purchase Agreement, we
will issue $650,000 of Commitment Shares to YA as consideration for
its irrevocable commitment to purchase Advance Shares under the
Purchase Agreement.
Any issuance of our Common Shares pursuant to the Purchase
Agreement will dilute the percentage ownership of shareholders and
may dilute the per share earnings (if any) or book value of our
Common Shares. Sales of a substantial number of our Common Shares
in the public market or other issuances of our Common Shares, or
the perception that these sales or issuances could occur, could
cause the market price of our Common Shares to decline and may make
it more difficult for you to sell your Common Shares at a time and
price that you deem appropriate.
It is not possible to predict the actual number of Advance Shares
we will sell under the Purchase Agreement to the Selling
Shareholder at any one time or in total, or the actual gross
proceeds resulting from those sales.
We generally have the right to control the timing and amount of any
sales of Advance Shares to YA under the Purchase Agreement. Sales
of Advance Shares, if any, to YA under the Purchase Agreement will
depend upon market conditions and other factors. We may ultimately
decide to sell to YA all, some or none of the Advance Shares that
may be available for us to sell to YA pursuant to the Purchase
Agreement.
Because the purchase price per share to be paid by YA for Advance
Shares that we may elect to sell to YA under the Purchase
Agreement, if any, will fluctuate based on the market prices of our
Common Shares during the applicable pricing period for each Advance
made pursuant to the Purchase Agreement, if any, it is not possible
for us to predict, as of the date of this prospectus and prior to
any such sales, the number of Advance Shares that we will sell to
YA under the Purchase Agreement, the purchase price per share that
YA will pay for Advance Shares purchased from us under the Purchase
Agreement, or the aggregate gross proceeds that we will receive
from those purchases by YA under the Purchase Agreement, if
any.
In addition, unless we obtain shareholder approval, we will not be
able to issue Common Shares in excess of the Exchange Cap under the
Purchase Agreement in accordance with applicable TSX and Nasdaq
rules. Depending on the market prices of our Common Shares in the
future, this could be a significant limitation on the amount of
funds we are able to raise pursuant to the Purchase Agreement.
Other limitations in the Purchase Agreement, including the
Ownership Limitation, the limitations on the maximum amount of
Advance Shares we may sell pursuant to any one Advance and the
limitations on the number of Advances we may make in any given
calendar month when certain
conditions exist, and our ability to meet the conditions necessary
to deliver an Advance Notice, could also prevent us from being able
to raise funds up to the Commitment Amount.
Moreover, although the Purchase Agreement provides that we may sell
up to an aggregate of $65.0 million of Advance Shares to YA, only
70,771,658 of our Common Shares are being registered for resale by
YA under the registration statement of which this prospectus is a
part, consisting of (i) up to 679,890 Commitment Shares that we
will issue to YA within five days of the Closing Date as
consideration for its commitment to purchase Advance Shares under
the Purchase Agreement and (ii) up to 70,091,768 Advance Shares
that we may elect to sell to YA, in our sole discretion, from time
to time after the date of this prospectus and during the Commitment
Period, subject to certain limitations and the satisfaction of the
conditions in the Purchase Agreement. Even if we elect to sell to
YA all of the Advance Shares being registered for resale under this
prospectus, depending on the market prices of our Common Shares at
the time of such sales, the actual gross proceeds from the sale of
all such Advance Shares may be substantially less than the $65.0
million Commitment Amount under the Purchase Agreement, which could
materially adversely affect our liquidity.
If we desire to issue and sell to YA under the Purchase Agreement
more than the 70,091,768 Advance Shares being registered for resale
under this prospectus, and the Exchange Cap provisions and other
limitations in the Purchase Agreement would allow us to do so, we
would need to file with the SEC one or more additional registration
statements to register under the Securities Act the resale by YA of
any such additional amount of our Common Shares and the SEC would
have to declare such registration statement or statements effective
before we could sell additional Advance Shares.
Further, the resale by YA of a significant amount of Common Shares
registered for resale in this offering at any given time, or the
perception that these sales may occur, could cause the market price
of our Common Shares to decline and to be highly volatile.
Investors who buy Common Shares at different times will likely pay
different prices.
Pursuant to the Purchase Agreement, we will have discretion,
subject to market demand, and subject to certain limitations and
the satisfaction of certain conditions, to vary the timing, prices,
and numbers of Advance Shares sold to YA. If and when we do elect
to sell Advance Shares to YA pursuant to the Purchase Agreement, YA
may resell all, some or none of such Advance Shares at any time or
from time to time in its discretion and at different prices. As a
result, investors who purchase Common Shares from YA in this
offering at different times will likely pay different prices for
those Common Shares, and so may experience different levels of
dilution and in some cases substantial dilution and different
outcomes in their investment results. Investors may experience a
decline in the value of the Common Shares they purchase from YA in
this offering as a result of future sales made by us to YA at
prices lower than the prices such investors paid for their Common
Shares in this offering.
There can be no assurance that we will be able to comply with
the continued listing standards of Nasdaq.
In connection with the Closing, we intend to list the Common Shares
on Nasdaq under the symbol “NB.” If, after the Transactions, Nasdaq
delists the Common Shares from trading on its exchange for failure
to meet Nasdaq listing standards, the Company and its shareholders
could face significant material adverse consequences,
including:
|
· |
a limited availability of market quotations for our
securities; |
|
· |
a determination that our Common Shares are a “penny stock,”
which will require brokers trading in Common Shares to adhere to
more stringent rules, possibly resulting in a reduced level of
trading activity in the secondary trading market for Common
Shares; |
|
· |
a limited amount of analyst coverage; and |
|
· |
a decreased ability to issue additional securities or obtain
additional financing in the future. |
Future sales, or the perception of future sales, of Common
Shares by existing shareholders or by us, or future dilutive
issuances of Common Shares by us, could adversely affect prevailing
market prices for the Common Shares.
Subject to compliance with applicable securities laws, sales of a
substantial number of Common Shares in the public market could
occur at any time. These sales, or the market perception that the
holders of a large number of Common Shares or securities
convertible into Common Shares intend to sell Common Shares, could
reduce the prevailing market price of the Common Shares. The
effect, if any, that future public sales of these securities or the
availability of these securities for sale will have on the market
price of the Common Shares is uncertain. If the market price of the
Common Shares were to drop as a result, this might impede our
ability to raise additional capital and might cause remaining
shareholders to lose all or part of their investment.
Following the consummation of the Transactions, GXII, GX Sponsor II
LLC, in its capacity as a shareholder of GXII (the “Sponsor”), as
well as the pre-Closing directors and officers of NioCorp and GXII,
will be subject to “lock-up” restrictions. The provisions of these
“lock-up” restrictions may be waived under limited circumstances
and allow us to, among other things, issue additional Common
Shares, or allow the directors and officers of NioCorp or its
shareholders to sell their Common Shares at any time. There are no
pre-established conditions for the grant of such a waiver by the
relevant parties, and any decision by the applicable parties to
waive those conditions may depend on a number of factors, which
might include market conditions, the performance of the Common
Shares in the market and our financial condition at that time. If
the “lock-up” restrictions of NioCorp are waived, additional Common
Shares will be issued, and if the “lock-up” restrictions of the
applicable shareholders or the directors and officers of NioCorp
are waived, additional Common Shares will be available for sale
into the public market, subject to applicable securities laws,
which, in both cases, could reduce the prevailing market price for
the Common Shares.
In addition, pursuant to the Yorkville Convertible Debt Financing
Agreement, YA may convert the Convertible Debentures and exercise
the Financing Warrants from time to time, subject to certain
limitations, and we will issue Common Shares to YA upon such
conversions and exercises. We have agreed to file a registration
statement under the Securities Act covering resales by YA of the
Common Shares issuable upon conversion of the Convertible
Debentures and exercise of the Financing Warrants. Accordingly, any
Common Shares that we issue upon conversion of the Convertible
Debentures or exercise of the Financing Warrants will be available
for sale into the public market, subject to applicable securities
laws, which could reduce the prevailing market price for the Common
Shares.
The Articles of NioCorp, as amended in connection with the
Transactions (the “Amended Articles”), will permit us to issue an
unlimited number of Common Shares without seeking shareholder
approval.
The Amended Articles will permit us to issue an unlimited number of
Common Shares. It is anticipated that we will, from time to time,
issue additional Common Shares in the future. Subject to the
requirements of the British Columbia Business Corporations Act,
Nasdaq and the TSX, we will not be required to obtain the approval
of the NioCorp shareholders for the issuance of additional Common
Shares. Any further issuances of Common Shares will result in
immediate dilution to existing shareholders and may have an adverse
effect on the value of their shareholdings.
NioCorp may be a “passive foreign investment company” for the
current taxable year and for one or more future taxable years,
which may result in materially adverse U.S. federal income tax
consequences for U.S. investors.
If NioCorp is a passive foreign investment company (“PFIC”) for any
taxable year, or portion thereof, that is included in the holding
period of a U.S. holder of Common Shares, such U.S. holder may be
subject to certain adverse U.S. federal income tax consequences and
additional reporting requirements. Although NioCorp believes it was
classified as a PFIC during its taxable years ended June 30, 2022
and June 30, 2021, based on the current composition of its income
and assets, as well as current business plans and financial
expectations, NioCorp does not currently expect to be treated as a
PFIC for the taxable year in which the Transactions occur or any
foreseeable future taxable years. However, this conclusion is a
factual determination that must be made annually at the close of
each taxable year and, thus, is subject to change. In addition, it
is possible notwithstanding NioCorp’s conclusion that the U.S.
Internal Revenue Service (the “IRS”) could assert, and that a court
could sustain, a determination that NioCorp is a PFIC. Accordingly,
there can be no assurance that NioCorp will not be treated as a
PFIC for any
taxable year. Each holder of Common Shares should consult its own
tax advisors regarding the PFIC rules and the U.S. federal income
tax consequences of the acquisition, ownership, and disposition of
such securities.
The Transactions could result in NioCorp becoming subject to
materially adverse U.S. federal income tax
consequences.
Section 7874 and related sections of the U.S. Internal Revenue Code
of 1986, as amended (the “Code”), provide for certain adverse tax
consequences when the stock of a U.S. corporation is acquired by a
non-U.S. corporation in certain transactions in which former
shareholders of the U.S. corporation come to own 60% or more of the
stock of the non-U.S. corporation (by vote or value, and applying
certain specific counting and ownership rules). These adverse tax
consequences include (i) potential additional required gain
recognition by the U.S. corporation, (ii) treatment of certain
payments to the non-U.S. corporation that reduce gross income as
“base erosion payments,” (iii) an excise tax on certain options and
stock-based compensation of the U.S. corporation, (iv) disallowance
of “qualified dividend” treatment for distributions by the non-U.S.
corporation, and (v) if former shareholders of the U.S. corporation
come to own 80% or more of the stock of the non-U.S. corporation,
treatment of the non-U.S. corporation as a U.S. corporation subject
to U.S. federal income tax on its worldwide income (in addition to
any tax imposed by non-U.S. jurisdictions). If the Transactions
result in the application of any of these, or any other, adverse
tax consequences, NioCorp could incur significant additional tax
costs. While NioCorp currently does not believe the Transactions
will cause such adverse tax consequences as a result of section
7874 and related sections of the Code, this determination is
subject to significant legal and factual uncertainty. NioCorp has
not sought and will not seek any rulings from the IRS as to the tax
treatment of any of the Transactions, and the Closing of the
Transactions is not conditioned upon receiving a ruling from any
tax authority or opinion from any tax advisor in regards to any
particular tax treatment. Further, there can be no assurance that
your tax advisor, the IRS, or a court, will agree with the position
that NioCorp is not subject to these adverse tax consequences.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the other documents incorporated by reference
into this prospectus contain or may contain “forward-looking
statements” within the meaning of Section 27A of the Securities Act
and Section 21E of the Exchange Act, and “forward-looking
information” within the meaning of applicable Canadian securities
laws (collectively, “forward-looking statements”).
Forward-looking statements have been based upon our current
business and operating plans, as approved by the Company’s Board of
Directors, and may include statements regarding our cash and other
funding requirements and timing and sources thereof; results of
feasibility studies; the accuracy of mineral resource and reserve
estimates and assumptions on which they are based; the results of
economic assessments and exploration activities; and current market
conditions and project development plans, and the Transactions. The
material assumptions used to develop the forward-looking statements
and forward-looking information included in this prospectus
include: our expectations of mineral prices; our forecasts and
expected cash flows; our projected capital and operating costs;
accuracy of mineral resource estimates and resource modeling and
feasibility study results; expectations regarding mining and
metallurgical recoveries; timing and reliability of sampling and
assay data; anticipated political and social conditions; expected
national and local government policies, including legal reforms;
successful advancement of the Company’s required permitting
processes; the ability to successfully raise additional capital;
the Company and GXII being able to receive all required regulatory
and third-party approvals for the Transactions; the amount of
redemptions by GXII public stockholders; the consummation of the
transactions contemplated by the Purchase Agreement and the
Yorkville Convertible Debt Financing Agreement; and other current
estimates and assumptions regarding the proposed Transactions and
their benefits.
Forward-looking statements are frequently, but not always,
identified by words such as “expects,” “anticipates,” “believes,”
“intends,” “estimates,” “potential,” “possible,” and similar
expressions, or statements that events, conditions, or results
“will,” “may,” “could,” or “should” (or the negative and
grammatical variations of any of these terms) occur or be achieved.
Any statements that express or involve discussions with respect to
predictions, expectations, beliefs, plans, projections, objectives,
assumptions, or future events or performance (often, but not
always, using words or phrases such as “expects” or “does not
expect,” “is expected,” “anticipates” or “does not anticipate,”
“plans,” “estimates,” or “intends,” or stating that certain
actions, events, or results “may,” “could,” “would,” “might,” or
“will” be taken, occur or be achieved) are not statements of
historical fact and may be forward-looking statements. Such
forward-looking statements reflect the Company’s current views with
respect to future events and are subject to certain known and
unknown risks, uncertainties, and assumptions. Many factors could
cause actual results, performance, or achievements to be materially
different from any future results, performance, or achievements
that may be expressed or implied by such forward-looking
statements, including, among others, risks related to the
following:
Risks Related to Our Business:
|
· |
risks related to our ability to
operate as a going concern; |
|
· |
risks related to our requirement of
significant additional capital; |
|
· |
risks related to our limited
operating history; |
|
· |
risks related to our history of
losses; |
|
· |
risks related to the restatement of
our consolidated financial statements as of and for the fiscal
years ended June 30, 2022 and 2021 and the interim periods ended
September 30, 2021, December 31, 2021, and March 31, 2022 and the
impact of such restatement on our future financial statements and
other financial measures; |
|
· |
risks related to the material
weakness in our internal control over financial reporting, our
efforts to remediate such material weakness and the timing of
remediation; |
|
· |
risks related to cost increases for
our exploration and, if warranted, development projects; |
|
· |
risks related to a disruption in,
or failure of, our information technology systems, including those
related to cybersecurity; |
|
· |
risks related to equipment and
supply shortages; |
|
· |
risks related to current and future
offtake agreements, joint ventures, and partnerships; |
|
· |
risks related to our ability to
attract qualified management; |
|
· |
risks related to the effects of the
COVID-19 pandemic or other global health crises on our business
plans, financial condition, and liquidity; and |
|
· |
risks related to the ability to
enforce judgment against certain of our directors. |
Risks Related to Mining and Exploration:
|
· |
risks related to estimates of
mineral resources and reserves; |
|
· |
risks related to mineral
exploration and production activities; |
|
· |
risks related to our lack of
mineral production from our properties; |
|
· |
risks related to the results of our
metallurgical testing; |
|
· |
risks related to the price
volatility of commodities; |
|
· |
risks related to the establishment
of a reserve and resource for REEs and the development of a viable
recovery process for REEs; |
|
· |
risks related to the estimation of
mineral resources and mineral reserves; |
|
· |
risks related to changes in mineral
resource and reserve estimates; |
|
· |
risks related to competition in the
mining industry; |
|
· |
risks related to the management of
the water balance at the Elk Creek Project; |
|
· |
risks related to claims on the
title to our properties; |
|
· |
risks related to potential future
litigation; and |
|
· |
risks related to our lack of
insurance covering all our operations. |
Risks Related to Government Regulations:
|
· |
risks related to our ability to
obtain or renew permits and licenses for production; |
|
· |
risks related to government and
environmental regulations that may increase our costs of doing
business or restrict our operations; |
|
· |
risks related to changes in federal
and/or state laws that may significantly affect the mining
industry; |
|
· |
risks related to the impacts of
climate change, as well as actions taken or required by governments
related to strengthening resilience in the face of potential
impacts from climate change; and |
|
· |
risks related to land reclamation
requirements. |
Risks Related to Our Debt:
|
· |
risks related to covenants
contained in agreements with our secured creditors that may affect
our assets; and |
|
· |
risks related to the extent to
which our level of indebtedness may impair our ability to obtain
additional financing. |
Risks Related to the Common Shares:
|
· |
risks related to our potential
qualification as a “passive foreign investment company” under the
Code; and |
|
· |
risks related to the Common Shares,
including price volatility, lack of dividend payments, dilution,
and penny stock rules. |
Risks Related to the Transactions:
|
· |
risks related to the outcome of any
legal proceedings that may be instituted against the Company or
GXII following announcement of the Business Combination Agreement
and the Transactions; |
|
· |
the risk that the consummation of
the Transactions disrupts our current plans; |
|
· |
risks relating to the ability to
recognize the anticipated benefits of the Transactions; and |
|
· |
risks relating to unexpected costs
related to the Transactions. |
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 Part I, Item 1A. “Risk Factors” contained in
our most recent Annual Report on Form 10-K, and Part II, Item 1A.
“Risk Factors” contained in our subsequent Quarterly Reports on
Form 10-Q, as well as any amendments thereto, which are
incorporated by reference into this prospectus and the applicable
prospectus supplement in their entirety, together with other
information in this prospectus and the applicable prospectus
supplement and the documents incorporated by reference herein and
therein. See the sections of this prospectus entitled “Where You
Can Find More Information” and “Incorporation of Documents by
Reference.”
The Company’s forward-looking statements contained in this
prospectus are based on the beliefs, expectations, and opinions of
management as of the date of this prospectus. 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.
USE OF PROCEEDS
This prospectus relates to Common Shares that may be offered and
sold from time to time by YA. All of the Common Shares offered by
the Selling Shareholder pursuant to this prospectus will be sold by
the Selling Shareholder for its own account. We will not receive
any of the proceeds from these sales.
We may receive up to $65.0 million aggregate gross proceeds under
the Purchase Agreement from any sales we make to YA pursuant to the
Purchase Agreement. However, we are unable to estimate the actual
amount of proceeds that we may receive, as it will depend on the
number of Advance Shares that we choose to sell, limitations in the
Purchase Agreement, including the Exchange Cap, the Ownership
Limitation, the limitations on the maximum amount of Advance Shares
we may sell pursuant to any one Advance and the limitations on the
number of Advances we may make in any given calendar month when
certain conditions exist, our ability to meet the conditions to
deliver an Advance Notice as set forth in the Purchase Agreement,
market conditions and the price of our Common Shares, among other
factors.
We expect to use any proceeds that we receive under the Purchase
Agreement for working capital and general corporate purposes,
including to advance our efforts to launch construction of the Elk
Creek Project and move it to commercial operation, and to satisfy
the fees and expenses incurred in connection with the Transactions,
if required.
DETERMINATION OF OFFERING PRICE
We cannot currently determine the price or prices at which Common
Shares may be sold by the Selling Shareholder under this prospectus
as the price will be determined by the prevailing public market
price for our Common Shares, by negotiations between the Selling
Shareholder and the buyers of Common Shares in private transactions
or as otherwise described in “Plan of Distribution.”
SELLING SHAREHOLDER
This prospectus relates to the offer and sale from time to time by
YA of up to 70,771,658 Common Shares, consisting of (i) up to
679,890 Commitment Shares and (ii) up to 70,091,768 Advance Shares,
that have been or may be issued by us to YA under the Purchase
Agreement. For additional information regarding the issuance of
Common Shares covered by this prospectus, see the section titled
“The YA Transaction” below. Except for the transactions
contemplated by the Purchase Agreement and the Yorkville
Convertible Debt Financing Agreement, YA does not, and has not had,
any material relationship with us.
The table below presents information regarding the Selling
Shareholder and the Common Shares that it may offer from time to
time under this prospectus. This table is prepared based on
information supplied to us by the Selling Shareholder. The number
of Common Shares in the column “Maximum Number of Common Shares to
be Offered Pursuant to this Prospectus” represents all of the
Common Shares that the Selling Shareholder may offer under this
prospectus. The Selling Shareholder may sell some, all or none of
its Common Shares covered by this prospectus in this offering. We
do not know how long the Selling Shareholder will hold the Common
Shares before selling them, and we currently have no agreements,
arrangements or understandings with the Selling Shareholder
regarding the sale of any of the Common Shares the Selling
Shareholder may offer under this prospectus.
Beneficial ownership is determined in accordance with Rule 13d-3(d)
promulgated by the SEC under the Exchange Act, and includes Common
Shares with respect to which the Selling Shareholder has voting and
investment power. The percentage of Common Shares beneficially
owned by the Selling Shareholder prior to and after the offering
shown in the table below is based on an aggregate of 282,466,201
Common Shares outstanding on March 10, 2023. The number of Common
Shares that may actually be issued by us under the Purchase
Agreement may be fewer than the number of Common Shares being
offered by this prospectus. The fourth column assumes the issuance
of all of the Common Shares offered by the Selling Shareholder
pursuant to this prospectus.
|
Number of Common Shares Beneficially Owned
Prior to Offering
|
Maximum
Number of
Common Shares to be Offered
Pursuant to this
Prospectus
|
Number of Common Shares Beneficially Owned
After Offering
|
Name of Selling Shareholder
|
Number(1)
|
Percent
|
Number(2)
|
Percent
|
YA II PN, Ltd.(3) |
76,637,191 |
21.34% |
70,771,658 |
75,957,301 |
17.70% |
|
(1) |
Beneficial ownership includes (a)
an estimated 679,890 Commitment Shares, which is equal to $650,000
divided by approximately $0.9560 (which is the closing price of the
Common Shares on the TSX on March 10, 2023 of C$1.32, converted to
U.S. dollars using the daily exchange rate on March 10, 2023 as
quoted by the Bank of Canada of US$1.00:C$1.3807); (b) an estimated
59,682,329 Common Shares issuable upon conversion of the
Convertible Debentures, assuming (i) the conversion of all
$16,000,000 aggregate principal amount of the Convertible
Debentures, plus $1,602,192 of accrued interest, (ii) a conversion
price of approximately $0.2949 (which is equal to 30% of the
average of the daily volume-weighted average price of the Common
Shares on the TSX during the five consecutive trading days ending
on March 10, 2023 of approximately C$1.3574, converted to U.S.
dollars using the daily exchange rate on March 10, 2023 as quoted
by the Bank of Canada of US$1.00:C$1.3807) and (iii) none of the
limitations on conversion of the Convertible Debentures set forth
in the Yorkville Convertible Debt Financing Agreement apply; and
(c) an estimated 16,274,972 Common Shares issuable upon exercise of
the Financing Warrants, assuming (i) all of the Financing Warrants
to be issued in connection with the issuance of all $16,000,000
aggregate principal amount of the Convertible Debentures are issued
on the same date, (ii) an exercise price of approximately $0.9831
(which is equal to the greater of (x) $10.00 divided by the
Exchange Ratio, or approximately $0.8942, and (y) the average of
the daily volume-weighted average price of the Common Shares on the
TSX during the five consecutive trading days ending on March 10,
2023 of approximately C$1.3574, converted to U.S. dollars using the
daily exchange rate on March 10, 2023 as quoted by the Bank of
Canada of US$1.00:C$1.3807), (iii) none of the holders of the
Financing Warrants elects cashless exercise and (iv) none of the
limitations on exercise of the Financing Warrants set forth the
Yorkville Convertible Debt Financing Agreement apply. Pursuant to
the terms of the Convertible Debentures and the Financing Warrants,
YA may not convert Convertible Debentures or exercise Financing
Warrants into Common Shares in an amount that would result in YA
(or its affiliates) beneficially owning (as determined in |
accordance with Section 13(d) of the Exchange Act and the rules
promulgated thereunder) more than 4.99% of the Common Shares
outstanding immediately after giving effect to such conversion or
exercise or receipt of shares (the “Beneficial Ownership
Limitation”); provided that YA may waive the Beneficial Ownership
Limitation upon not less than 65 days’ prior notice to NioCorp. In
accordance with Rule 13d-3(d) under the Exchange Act, we have
excluded from the number of Common Shares beneficially owned prior
to the offering all of the Common Shares that YA may be required to
purchase under the Purchase Agreement, because the issuance of such
Common Shares is solely at our discretion and is subject to
conditions contained in the Purchase Agreement, the satisfaction of
which are entirely outside of YA’s control, including the
registration statement that includes this prospectus becoming and
remaining effective.
|
(2) |
Assumes the sale of all Common
Shares being offered pursuant to this prospectus. Depending on the
price per share at which we sell Advance Shares to YA pursuant to
the Purchase Agreement, we may need to sell to YA under the
Purchase Agreement more Advance Shares than are offered under this
prospectus in order to receive aggregate gross proceeds equal to
the $65.0 million Commitment Amount under the Purchase Agreement.
If we choose to do so and otherwise satisfy the conditions in the
Purchase Agreement, we must first register for resale under the
Securities Act such additional Advance Shares. The number of Common
Shares ultimately offered for resale by YA is dependent upon the
number of Advance Shares we sell to YA under the Purchase
Agreement. |
|
(3) |
YA is a fund managed by Yorkville
Advisors Global, LP. Yorkville Advisors Global II, LLC (“Yorkville
LLC”) is the General Partner of Yorkville Advisors Global, LP. All
investment decisions for YA are made by Yorkville LLC’s President
and Managing Member, Mr. Mark Angelo. The business address of YA is
1012 Springfield Avenue, Mountainside, NJ 07092. |
THE YA TRANSACTION
On January 26, 2023, we entered into the Purchase Agreement,
pursuant to which YA has committed to purchase up to $65.0 million
of our Common Shares, at our direction from time to time after the
date of this prospectus and during the Commitment Period, subject
to certain limitations and the satisfaction of the conditions in
the Purchase Agreement.
Under the terms and subject to the conditions of the Purchase
Agreement, we have the right, but not the obligation, to sell to
YA, and YA is obligated to purchase up to $65.0 million of our
Common Shares. Such sales of Common Shares, if any, will be subject
to certain limitations, and may occur from time to time at our sole
discretion, after the date of this prospectus and during the
Commitment Period, provided, that the registration statement of
which this prospectus is a part covering the resale by YA of Common
Shares that have been and may be issued under the Purchase
Agreement is declared effective by the SEC and the other conditions
set forth in the Purchase Agreement are satisfied.
YA has no right to require us to sell any Advance Shares to YA, but
YA is obligated to make purchases at our direction, subject to
certain limitations and the satisfaction of certain conditions.
There is no upper limit on the price per share that YA could be
obligated to pay for the Advance Shares under the Purchase
Agreement. Actual sales of Advance Shares to YA from time to time
will depend on a variety of factors, including, among others,
market conditions, the trading price of our Common Shares and
determinations by us as to the appropriate sources of funding for
us and our operations.
We do not know what the purchase price for our Common Shares will
be and therefore cannot be certain as to the number of Common
Shares we might issue to YA under the Purchase Agreement. As of
March 10, 2023, there were 282,466,201 of our Common Shares
outstanding. Although the Purchase Agreement provides that we may
sell up to $65.0 million of Advance Shares to YA, only 70,771,658
of our Common Shares are being registered for resale by the Selling
Shareholder under this prospectus, which represent (i) up to
679,890 Commitment Shares that we will issue to YA within five days
of the Closing Date as consideration of its irrevocable commitment
to purchase Advance Shares under the Purchase Agreement and (ii) up
to 70,091,768 Advance Shares that may be issued to YA, if and when
we elect to sell Advance Shares under the Purchase Agreement,
subject to certain limitations and the satisfaction of certain
conditions. Depending on the market prices of our Common Shares at
the time we elect to issue and sell Advance Shares to YA under the
Purchase Agreement, to the extent the Exchange Cap provisions and
other limitations in the Purchase Agreement allow, we may need to
file with the SEC one or more additional registrations statements
to register for resale additional Common Shares in order to receive
aggregate gross proceeds equal to the $65.0 million Commitment
Amount under the Purchase Agreement. Pursuant to the Purchase
Agreement, in no event shall the number of Common Shares issued to
Yorkville thereunder exceed the amount covered by an effective
registration statement under the Securities Act covering the resale
of all such Common Shares. If all of the 70,771,658 Common Shares
offered by YA under this prospectus were issued and outstanding as
of the date hereof, such Common Shares would represent
approximately 20.04% of the total number of Common Shares
outstanding as of March 10, 2023.
Under the Purchase Agreement, in no event may we issue or sell to
YA Common Shares in excess of 19.99% of the Common Shares
outstanding immediately prior to the Closing, after giving effect
to the reverse stock split contemplated by the Business Combination
Agreement (the “Exchange Cap”), unless we obtain shareholder
approval to issue Common Shares in excess of the Exchange Cap in
accordance with the rules of Nasdaq and the TSX.
The Purchase Agreement also prohibits us from directing YA to
purchase any Common Shares (A) which, when aggregated with all
other Common Shares then beneficially owned by YA and its
affiliates (as calculated pursuant to Section 13(d) of the Exchange
Act and Rule 13d-3 promulgated thereunder), would result in YA and
its affiliates (on an aggregated basis) having beneficial ownership
of more than the 4.99% of the then outstanding voting power or
number of Common Shares or (B) which, when aggregated with all
other Common Shares beneficially owned by YA or any joint actors,
or over which such persons exercise control or direction
(determined in accordance with applicable securities laws in the
Province of Ontario), would result in such persons beneficially
owning or having control or direction over in excess of 19.99% of
the then outstanding voting power or number of Common Shares (the
“Ownership Limitation”).
The net proceeds under the Purchase Agreement to us will depend on
the frequency and prices at which we sell our Common Shares to YA.
We expect to use any proceeds that we receive under the Purchase
Agreement for working capital and general corporate purposes,
including to advance our efforts to launch construction of the Elk
Creek Project and move it to commercial operation, and to satisfy
the fees and expenses incurred in connection with the Transactions,
if required.
As consideration for YA’s irrevocable commitment to purchase
Advance Shares upon the terms of and subject to satisfaction of the
conditions set forth in the Purchase Agreement, we will issue
$650,000 of Commitment Shares to YA within five days of the Closing
Date. The Common Shares issuable pursuant to the Purchase Agreement
are being offered and sold to YA on a private offering basis
pursuant to the exemption from the registration requirements of the
Securities Act provided by Section 4(a)(2) thereof.
Purchase of Common Shares Under the Purchase Agreement
Subject to the limitations and the satisfaction of the conditions
under the Purchase Agreement, we have the right, but not the
obligation, from time to time at our sole discretion after the date
of this prospectus and during the Commitment Period, to direct YA
to purchase amounts of Advance Shares under the Purchase Agreement
that we specify in a written notice (an “Advance Notice”) delivered
to YA on a trading day. The maximum amount of Advance Shares that
we may specify in an Advance Notice is the greater of: (i) a number
of Common Shares equal to 100% of the average of the daily trading
volume of the Common Shares on Nasdaq or such other principal U.S.
market for the Common Shares if the Common Shares are ever listed
or traded on the New York Stock Exchange or the NYSE American (the
“Principal U.S. Market”) during regular trading hours as reported
by Bloomberg Financial Markets (or, if not available, a similar
service provider of national recognized standing), during the five
trading days immediately preceding an Advance Notice, or (ii)
5,000,000 Common Shares; provided however, if any
Convertible Debentures issued to YA by the Company pursuant to the
Yorkville Convertible Debt Financing Agreement are outstanding when
an Advance Notice is delivered to YA, then the maximum Advance
amount shall be limited to the number of Common Shares described in
clause (i) above. Further, for so long as any Convertible
Debentures issued to YA are outstanding, unless YA gives its prior
written consent, we will not be permitted to (i) effect any
Advances if (A) the number of Common Shares that we at the time may
still issue without shareholder approval in compliance with the
rules of Nasdaq and the TSX in connection with the transactions
contemplated by the Yorkville Convertible Debt Financing Agreement
and all other related transactions that would be considered part of
the same series of transactions is less than (B) 200% of the
maximum number of Common Shares issuable upon conversion of all
Convertible Debentures (assuming for purposes hereof that (x) such
Convertible Debentures are convertible, as of the date of
determination, at 30% of the average of the daily U.S. dollar
volume-weighted average price of the Common Shares on the principal
U.S. market for the Common Shares during the five consecutive
trading days immediately preceding the date of the First Debenture
Closing and (y) any such conversion shall not take into account any
limitations on the conversion of the Convertible Debentures set
forth therein) at such time, or (ii) effect more than two Advances
in any month. Subject to the limitations and the satisfaction of
the conditions under the Purchase Agreement, we may deliver Advance
Notices from time to time during the Commitment Period, provided
that we have delivered all Advance Shares relating to all prior
Advance Notices.
Each Advance Notice will specify (1) the amount of the Advance in
Advance Shares and (2) the elected purchase price option among
Purchase Price Option #1 and Purchase Price Option #2, as described
below.
Purchase Price Option #1:
If we submit a valid Advance Notice that specifies this purchase
price option, we will sell Advance Shares to YA at a purchase price
equal to 97% of the VWAP of the Common Shares on the Principal U.S.
Market during the applicable pricing period, which is a period
during a single trading day defined based on when the Advance
Notice is submitted (“Purchase Price Option #1”). If the Advance
Notice is submitted by 9:30 a.m., New York City time, on a trading
day, then the pricing period under Purchase Price Option #1 will
commence as of the open of trading on such day and will end at 4:00
p.m., New York City time, on such day. If the Advance Notice is
submitted after 9:30 a.m., New York City time, on a trading day,
then the pricing period under Purchase Price Option #1 will
commence upon receipt by us of written confirmation of receipt of
such Advance Notice by YA and will end at 4:00 p.m., New York City
time, on such day.
Under Purchase Price Option #1, if the volume of Common Shares
traded on the Principal U.S. Market for the during the applicable
pricing period is less than the number of Advance Shares set out in
the Advance Notice divided by 0.30, the number of Advance Shares
that must be purchased by Yorkville pursuant to such Advance Notice
will be reduced to the greater of (a) 30% of the trading volume of
the Common Shares on the Principal U.S. Market during the
applicable pricing period as reported by Bloomberg Financial
Markets (or, if not available, a similar service provider of
national recognized standing), and (b) the number of Common Shares
sold by Yorkville during the applicable pricing period, but not to
exceed the number of Advance Shares specified by us in the Advance
Notice.
Purchase Price Option #2:
If we submit a valid Advance Notice that specifies this purchase
price option, we will sell Advance Shares to YA at a purchase price
equal to 97% of the average of the daily VWAPs of the Common Shares
on the Principal U.S. Market during a pricing period of three
consecutive trading days commencing on the trading day the Advance
Notice is received by YA, if it is received by 9:30 a.m., New York
City time, or the immediately following trading day if it is
received after 9:30 a.m., New York City time (“Purchase Price
Option #2” and, together with Purchase Price Option #1, the
“Purchase Price”). Purchase Price Option #2 will be used whenever
any Convertible Debentures issued to YA are outstanding, unless
waived by YA.
If the VWAP on any trading day during a pricing period under
Purchase Price Option #2 is below a minimum price set by us, if
any, in connection with a particular Advance Notice or there is no
VWAP on any trading day during a pricing period under Purchase
Price Option #2 (an “Excluded Day”), then for each such trading day
(i) the number of Advance Shares specified by us in the Advance
Notice shall be deemed to be automatically reduced by an amount
equal to 33% of the original number of Advance Shares specified by
us in the Advance Notice and (ii) such day shall not be factored
into the determination of the average of the daily VWAPs during
such pricing period. If YA sells any Common Shares on an Excluded
Day, then the number of Advance Shares specified by us in the
Advance Notice shall be deemed to be automatically increased by an
amount equal to the number of Common Shares sold by Yorkville on
such Excluded Day (but not above the original number of Advance
Shares specified by us in the Advance Notice), and the Purchase
Price to be paid by Yorkville for each such Advance Share upon
settlement of the applicable Advance shall be deemed to be equal to
the minimum price set by us in connection with such Advance Notice
(without any further discount).
Subject to the limitations and adjustments described above, YA will
become irrevocably bound to purchase a number of Advance Shares at
the applicable Purchase Price pursuant to each valid Advance
Notice.
The payment for, against simultaneous delivery of, shares in
respect of each Advance under the Purchase Agreement will be
settled as soon as practicable on or after the first trading day
after expiration of the applicable pricing period for each Advance
(each, an “Advance Date”), as set forth in the Purchase
Agreement.
Conditions to Delivery of Advance Notices
Our ability to deliver Advance Notices to YA under the Purchase
Agreement is subject to the satisfaction of certain conditions, all
of which are entirely outside of YA’s control, including, among
other things, the following:
|
• |
the accuracy in all material
respects of our representations and warranties included in the
Purchase Agreement; |
|
• |
the effectiveness of a
registration statement under the Securities Act registering the
resale in the United States of the Common Shares issuable pursuant
to such Advance Notice; |
|
• |
our having obtained shareholder
approval for the transactions contemplated by the Purchase
Agreement in accordance with the rules of the TSX; |
|
• |
our receipt of all permits and
qualifications required by any applicable state for the offer and
sale of Common Shares issuable pursuant to such Advance
Notice; |
|
• |
no Material Outside Event (as
defined in the Purchase Agreement) shall have occurred or be
continuing; |
|
• |
us having performed, satisfied
and complied in all material respects with all covenants,
agreements and conditions required by the Purchase Agreement to be
performed, satisfied or complied with by us; |
|
• |
the absence of any statute,
regulation, order, decree, writ, ruling or injunction by any court
or governmental authority of competent jurisdiction which prohibits
or directly, materially and adversely affects any of the
transactions contemplated by the Purchase Agreement; |
|
• |
our Common Shares are quoted for
trading on the Principal U.S. Market and all of the Advance Shares
issuable pursuant to such Advance Notice will be listed or quoted
for trading on the Principal U.S. Market, the issuance of Advance
Shares with respect to the applicable Advance Notice will not
violate the sharehodler approval requirements of the Principal U.S.
Market and the Company shall not have received any written notice
that is then still pending threatening the continued quotation of
the Common Shares on the Principal U.S. Market;; |
|
• |
there shall be a sufficient
number of authorized but unissued and otherwise unreserved Common
Shares for the issuance of all the Common Shares issuable pursuant
to such Advance Notice; |
|
• |
the representations contained in
the applicable Advance Notice shall be true and correct in all
material respects; and |
|
• |
except with respect to the first
Advance Notice, our having delivered all Advance Shares relating to
all prior Advances. |
Short-Selling or Hedging by YA
YA has agreed that, during the term of the Purchase Agreement,
neither YA nor its affiliates will engage in any short sales or
hedging transactions that establish a net short position with
respect to our Common Shares, provided that upon receipt of an
Advance Notice, YA may sell Advance Shares that it is obligated to
purchase under such Advance Notice prior to taking possession of
such Advance Shares.
Termination of the Purchase Agreement
Unless earlier terminated as provided in the Purchase Agreement,
the Purchase Agreement will automatically terminate upon the
earliest of:
|
• |
the first day of the month next
following the 36-month anniversary of the Closing; and |
|
• |
the date on which YA shall have
made payment of the full Commitment Amount. |
We have the right to terminate the Purchase Agreement at any time,
at no cost or penalty, upon five trading days’ prior written notice
to YA, providing that:
|
• |
there are no Advance Notices
under which Advance Shares have not yet been issued and paid for;
and |
|
• |
we have paid all amounts owed to
YA pursuant to the Purchase Agreement, including all remaining
installments of the Cash Fee that have not otherwise been paid by
us. |
The Purchase Agreement will automatically terminate if, at any time
prior to the Closing Date, the Business Combination Agreement is
terminated.
We and YA may also terminate the Purchase Agreement at any time by
mutual written consent.
Effect of Performance of the Purchase Agreement on our
Shareholders
All
Common Shares that may be issued or sold by us to YA under the
Purchase Agreement that are being registered under the Securities
Act for resale by YA under this prospectus are expected to be
freely tradable. The Advance Shares being registered for resale in
this offering may be issued and sold by us to YA from time to time
at our discretion after the date of this prospectus and during the
Commitment Period, subject to certain limitations and
the
satisfaction of certain conditions. The resale by YA of a
significant amount of Common Shares registered for resale in this
offering at any given time, or the perception that these sales may
occur, could cause the market price of our Common Shares to decline
and to be highly volatile. Sales of Advance Shares, if any, to YA
under the Purchase Agreement will depend upon market conditions and
other factors. We may ultimately decide to sell to YA all, some or
none of the Advance Shares that may be available for us to sell to
YA pursuant to the Purchase Agreement.
Depending on market price of our Common Shares and subject to the
Exchange Cap and other limitations in the Purchase Agreement, we
may seek to issue and sell to YA under the Purchase Agreement more
Advance Shares than are offered under this prospectus in order to
receive aggregate gross proceeds equal to the $65.0 million
Commitment Amount under the Purchase Agreement. If we choose to do
so, we must first register for resale under the Securities Act any
such additional Advance Shares, which could cause additional
substantial dilution to our shareholders. The number of Common
Shares ultimately offered for resale under this prospectus is
dependent upon the number of Advance Shares we direct YA to
purchase under the Purchase Agreement.
Description of Capital Stock
Common Shares
The authorized capital of the Company consists of an unlimited
number of Common Shares, without par value. The holders of Common
Shares are entitled to receive notice of and attend all meetings of
shareholders, with each Common Share held entitling the holder to
one vote on any resolution to be passed at such shareholder
meetings. The holders of Common Shares are entitled to dividends
if, as and when declared by the Company’s Board of Directors. The
Common Shares are entitled, upon liquidation, dissolution, or
winding up of the Company, to receive the remaining assets of the
Company available for distribution to shareholders. There are no
pre-emptive, conversion, or redemption rights attached to the
Common Shares.
Exchange Controls
There are no governmental laws, decrees, or regulations in Canada
that restrict the export or import of capital, including foreign
exchange controls, or that affect the remittance of dividends,
interest or other payments to non-resident holders of the
securities of the Company, other than as discussed below and
Canadian withholding tax. See “Certain Canadian Federal Income Tax
Considerations for U.S. Residents” below.
Competition Act
Limitations on the ability to acquire and hold Common Shares may be
imposed by the Competition Act (Canada). This legislation permits
the Commissioner of Competition of Canada (the “Commissioner”) to
review any acquisition of a significant interest in the Company.
This legislation grants the Commissioner jurisdiction to challenge
such an acquisition before the Canadian Competition Tribunal if the
Commissioner believes that it would, or would be likely to, result
in a substantial lessening or prevention of competition in any
market in Canada.
Investment Canada Act
The Investment Canada Act subjects an acquisition of control of a
company by a non-Canadian to government review if the enterprise
value of such company, as calculated pursuant to the legislation,
exceeds a threshold amount. A reviewable acquisition may not
proceed unless the relevant minister is satisfied that the
investment is likely to result in a net benefit to Canada. Under
the national-security-review regime in the Investment Canada Act,
review on a discretionary basis may also be undertaken by the
federal government in respect of a broad range of investments by a
non-Canadian. No financial threshold applies to a national security
review. The relevant test is whether such investment by a
non-Canadian could be “injurious to national security.”
Warrants
From time to time, the Company has outstanding Common Share
purchase warrants, with each Common Share purchase warrant
exercisable for one Common Share. The exercise price per Common
Share and the number of Common Shares issuable upon exercise of
Common Share purchase warrants is subject to adjustment upon the
occurrence of certain events, including, but not limited to, the
following:
|
· |
the subdivision or re-division of
the outstanding Common Shares into a greater number of Common
Shares; |
|
· |
the reduction, combination or
consolidation of the outstanding Common Shares into a lesser number
of Common Shares; |
|
· |
the issuance of Common Shares or
securities exchangeable for, or convertible into, Common Shares to
all or substantially all of the holders of Common Shares by way of
stock dividend or other distribution (other than a distribution of
Common Shares upon the exercise of Common Share purchase warrants
or any outstanding options); |
|
· |
the reorganization of the Company
or the consolidation or merger or amalgamation of the Company with
or into another body corporate; and |
|
· |
a reclassification or other similar
change to the outstanding Common Shares. |
The
Company will issue the Common Shares issuable upon exercise of
Common Share purchase warrants within five business days following
its receipt of notice of exercise and payment of the exercise
price, subject to surrender of the Common Share purchase warrants.
Prior to the exercise of any Common Share purchase warrants,
holders of the Common Share purchase warrants will not have any of
the rights of holders of the Common Shares issuable upon exercise,
including the right to vote or to receive any payments of dividends
on the Common Shares issuable upon exercise.
NioCorp Assumed Warrants
In connection with the Business Combination Agreement, the Company
has agreed to assume the Warrant Agreement (the “GXII Warrant
Agreement”), dated as of March 17, 2021, by and between GXII and
Continental Stock Transfer & Trust Company, and each share
purchase warrant of GXII thereunder (the “GXII Warrants”) that is
issued and outstanding immediately prior to the Closing Date will
be converted into one Common Share purchase warrant (the “NioCorp
Assumed Warrants”) pursuant to the GXII Warrant Agreement, as
amended by an assignment, assumption and amendment agreement, to be
dated the Closing Date (the GXII Warrant Agreement, as so amended,
the “NioCorp Assumed Warrant Agreement”), among NioCorp, GXII,
Continental Stock Transfer & Trust Company, and Computershare
Trust Company, N.A. or one of its affiliates, as successor warrant
agent (the “NioCorp Assumed Warrant Agent”). Each NioCorp Assumed
Warrant will be exercisable solely for Common Shares, and the
number of Common Shares subject to each NioCorp Assumed Warrant
will be equal to the number of Class A shares in GXII subject to
the applicable GXII Warrant multiplied by 11.1829212, with the
applicable exercise price adjusted accordingly.
The NioCorp Assumed Warrants will expire five years after the
Closing Date, at 5:00 p.m., New York City time, or earlier upon
redemption or liquidation.
The Company will not be obligated to deliver any Common Shares
pursuant to the exercise of a NioCorp Assumed Warrant and will have
no obligation to settle such exercise unless a registration
statement under the Securities Act with respect to the Common
Shares underlying the NioCorp Assumed Warrants is then effective
and a prospectus relating thereto is current, subject to the
Company satisfying its obligations described below with respect to
registration. No NioCorp Assumed Warrant will be exercisable and
the Company will not be obligated to issue Common Shares upon
exercise of a NioCorp Assumed Warrant unless Common Shares issuable
upon such exercise have been registered, qualified or deemed to be
exempt under the securities laws of the state of residence of the
registered holder of the NioCorp Assumed Warrants. In the event
that the conditions in the two immediately preceding sentences are
not satisfied with respect to a NioCorp Assumed Warrant, the holder
of such NioCorp Assumed Warrant will not be entitled to exercise
such NioCorp Assumed Warrant and such NioCorp Assumed Warrant may
have no value and expire worthless. In no event will the Company be
required to net cash settle any NioCorp Assumed Warrant.
The NioCorp Assumed Warrants, and the underlying Common Shares
issuable upon the exercise thereof, are being registered under the
Securities Act pursuant to the Company’s registration statement on
Form S-4, originally filed on November 7, 2022, as subsequently
amended, which was declared effective by the SEC on February 8,
2023.
The Company will have the right to call the NioCorp Assumed
Warrants for redemption at any time following the date of
Closing:
|
· |
in whole and not in part; |
|
· |
at a price of $0.01 per NioCorp
Assumed Warrant; |
|
· |
upon not less than 30 days’ prior
written notice of redemption (the “30-day redemption period”) to
each NioCorp Assumed Warrant holder; |
|
· |
if, and only if, the reported last
sale price of the Common Shares equals or exceeds $18.00 per share
(as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within a
30-trading day period commencing once the NioCorp Assumed Warrants
become exercisable and ending three business days before the
Company sends the notice of redemption to the NioCorp Assumed
Warrant holders; and |
|
· |
if there is an effective
registration statement covering the Common Shares issuable upon
exercise of the NioCorp Assumed Warrants, and a current prospectus
relating thereto, available throughout the 30-day redemption
period. |
The
Company may not exercise its redemption right if the issuance of
Common Shares upon exercise of the NioCorp Assumed Warrants is not
exempt from registration or qualification under applicable state
blue sky laws or the Company is unable to effect such registration
or qualification.
If the Company calls the NioCorp Assumed Warrants for redemption as
described above, the Company will have the option to require any
holder that wishes to exercise its NioCorp Assumed Warrant to do so
on a “cashless basis.” In determining whether to require all
holders to exercise their NioCorp Assumed Warrants on a “cashless
basis,” the Company will consider, among other factors, its cash
position, the number of NioCorp Assumed Warrants that are
outstanding and the dilutive effect on the Company’s shareholders
of issuing the maximum number of Common Shares issuable upon the
exercise of the NioCorp Assumed Warrants. If the Company takes
advantage of this option, all holders of NioCorp Assumed Warrants
would pay the exercise price by surrendering their NioCorp Assumed
Warrants for that number of Common Shares equal to the quotient
obtained by dividing (x) the product of the number of Common Shares
underlying the NioCorp Assumed Warrants, multiplied by the
difference between the exercise price of the NioCorp Assumed
Warrants and the “fair market value” (defined below) by (y) the
fair market value. The “fair market value” shall mean the average
reported last sale price of the Common Shares for the 10 trading
days ending on the third trading day prior to the date on which the
notice of redemption is sent to the holders of NioCorp Assumed
Warrants. If the Company takes advantage of this option, the notice
of redemption will contain the information necessary to calculate
the number of Common Shares to be received upon exercise of the
NioCorp Assumed Warrants, including the “fair market value” in such
case. Requiring a cashless exercise in this manner will reduce the
number of Common Shares to be issued and thereby lessen the
dilutive effect of a redemption of the NioCorp Assumed Warrants. If
the Company calls the NioCorp Assumed Warrants for redemption and
does not take advantage of this option, the Sponsor and its
permitted transferees would still be entitled to exercise their
founder NioCorp Assumed Warrants for cash or on a cashless basis
using the same formula described above that other NioCorp Assumed
Warrant holders would have been required to use had all NioCorp
Assumed Warrant holders been required to exercise their NioCorp
Assumed Warrants on a cashless basis, as described in more detail
below.
A holder of a NioCorp Assumed Warrant may notify the Company in
writing in the event it elects to be subject to a requirement that
such holder will not have the right to exercise such NioCorp
Assumed Warrant, to the extent that after giving effect to such
exercise, such holder (together with such holder’s affiliates), to
the NioCorp Assumed Warrant Agent’s actual knowledge, would
beneficially own in excess of 4.9% or 9.8% (or such other amount as
a holder may specify) of the Common Shares outstanding immediately
after giving effect to such exercise.
The NioCorp Assumed Warrants will have certain anti-dilution and
adjustments rights upon certain events.
The NioCorp Assumed Warrants will be issued in registered form
under the NioCorp Assumed Warrant Agreement. The NioCorp Assumed
Warrant Agreement provides that the terms of the NioCorp Assumed
Warrants may be amended without the consent of any holder to cure
any ambiguity or correct any mistake or to correct any defective
provision, but requires the approval by the holders of at least a
majority of the then outstanding public NioCorp Assumed Warrants to
make any change that adversely affects the interests of the
registered holders of public NioCorp Assumed Warrants.
The NioCorp Assumed Warrants may be exercised upon surrender of the
certificate representing such NioCorp Assumed Warrants on or prior
to the expiration date at the offices of the NioCorp Assumed
Warrant Agent, with the exercise form on the reverse side of such
certificate completed and executed as indicated, accompanied by
full payment of the exercise price (or on a cashless basis, if
applicable), by certified or official bank check payable to the
order of the NioCorp Assumed Warrant Agent or by wire transfer, for
the number of NioCorp Assumed Warrants being exercised. The NioCorp
Assumed Warrant holders will not have the rights or privileges of
holders of Common Shares or any attendant voting rights until they
exercise their NioCorp Assumed Warrants and receive Common Shares.
After the issuance of Common Shares upon exercise of the NioCorp
Assumed Warrants, each holder will be entitled to one (1) vote for
each Common Share held of record on all matters to be voted on by
NioCorp shareholders.
If, upon exercise of the NioCorp Assumed Warrants, a holder would
be entitled to receive a fractional interest in a share, the
Company will, upon exercise, round down to the nearest whole number
of Common Shares to be issued to the NioCorp Assumed Warrant
holder.
Convertible Debentures
On January 26, 2023, NioCorp entered into the Yorkville Convertible
Debt Financing Agreement with YA. Pursuant to the Yorkville
Convertible Debt Financing Agreement, the Investors will advance an
initial total amount of $9,600,000 to NioCorp in consideration of
the issuance by NioCorp to the Investors of $10,000,000 aggregate
principal amount of Convertible Debentures at the time of Closing
(the “First Debenture Closing”), and an additional total amount of
$5,760,000 to NioCorp in consideration of the issuance by NioCorp
to the Investors of $6,000,000 aggregate principal amount of
Convertible Debentures on a date to be determined at the election
of NioCorp, but which may not be prior to the later to occur of (i)
the date of filing of the Convertible Debt Financing Registration
Statement (as defined below) and (ii) the date of Closing (together
with the First Debenture Closing, the “Debenture Closings”).
Each Convertible Debenture issued under the Yorkville Convertible
Debt Financing Agreement will be an unsecured obligation of
NioCorp, will have an 18-month term from the First Debenture
Closing, which may be extended for one six-month period in certain
circumstances at the option of NioCorp, and will incur a simple
interest rate obligation of 5.0% per annum (which will increase to
15.0% per annum upon the occurrence of an event of default). The
outstanding principal amount of, accrued and unpaid interest, if
any, on, and premium, if any, on the Convertible Debentures must be
paid by NioCorp in cash when the same becomes due and payable under
the terms of the Convertible Debentures at their stated maturity,
upon their redemption or otherwise.
Subject to certain limitations contained within the Yorkville
Convertible Debt Financing Agreement and the Convertible
Debentures, including those as described below, holders of the
Convertible Debentures will be entitled to convert the principal
amount of, and accrued and unpaid interest, if any, on each
Convertible Debenture, in whole or in part, from time to time over
their term, into a number of Common Shares equal to the quotient of
the principal amount and accrued and unpaid interest, if any, being
converted divided by the Conversion Price. The “Conversion Price”
means, as of any Conversion Date (as defined below) or other date
of determination, the greater of (i) 90% of the average of the
daily U.S. dollar volume-weighted average price of the Common
Shares on the principal U.S. market for the Common Shares as
reported by Bloomberg Financial Markets during the five consecutive
trading days immediately preceding the date on which the holder
exercises its conversion right in accordance with the requirements
of the Yorkville Convertible Debt Financing Agreement (the
“Conversion Date”) or other date of determination, but not lower
than the Floor Price (as defined below), and (ii) the five-day
volume-weighted average price of the Common Shares on the TSX (or
on the principal U.S. market if the majority of the trading volume
and value of the Common Shares occurred on Nasdaq during the
relevant period) for the five consecutive trading days immediately
prior to the Conversion Date or other date of determination less
the maximum applicable discount allowed by the TSX. The “Floor
Price” means a price per share equal to the lesser of (a) 30% of
the average of the daily volume-weighted average price of the
Common Shares on the principal U.S. market for the Common Shares as
reported by Bloomberg Financial Markets during the five consecutive
trading days immediately preceding the First Debenture Closing and
(b) 30% of the average of the volume-weighted average price of the
Common Shares on the principal U.S. market for the Common Shares as
reported by Bloomberg Financial Markets during the five consecutive
trading days immediately following the First Debenture Closing,
subject to certain adjustments to give effect to any stock
dividend, stock split, reverse stock split or recapitalization.
The terms of the Convertible Debentures restrict the number of
Convertible Debentures that may be converted during each calendar
month by an Investor at a Conversion Price below a fixed price
equal to the quotient of (i) $10.00 divided by (ii) 11.1829212
(being the number of Common Shares that will be exchanged for each
share of
GXII
at the Closing), subject to adjustment to give effect to any stock
dividend, stock split or recapitalization. The Convertible
Debentures will be subject to customary anti-dilution
adjustments.
The terms of the Convertible Debentures restrict the conversion of
Convertible Debentures by an Investor if such a conversion would
cause the Investor to exceed certain beneficial ownership
thresholds in NioCorp or such a conversion would cause the
aggregate number of Common Shares issued pursuant to the Yorkville
Convertible Debt Financing Agreement to exceed the thresholds for
issuance of Common Shares under the rules of the TSX and Nasdaq,
unless prior shareholder approval is obtained.
Financing Warrants
In conjunction with each Debenture Closing, NioCorp will issue to
the Investors Financing Warrants to purchase a number of Common
Shares as is equal to the quotient of the principal amount of
Convertible Debentures issued in such Debenture Closing divided by
the “Exercise Price,” which is equal to the greater of: (a) the
quotient of $10.00 divided by 11.1829212; or (b) the average of the
daily volume-weighted average price of the Common Shares on the
principal U.S. market for the Common Shares during regular trading
hours as reported by Bloomberg Financial Markets during the five
consecutive trading days ending on the trading day immediately
prior to such Debenture Closing, in each case subject to any
adjustment to give effect to any stock dividend, stock split or
recapitalization.
The Financing Warrants will be exercisable, in whole or in part,
but not in increments of less than $50,000 aggregate Exercise Price
(unless the remaining aggregate Exercise Price is less than
$50,000), beginning on the earlier of (a) six months following the
issuance of the applicable Financing Warrants or (b) the effective
date of the initial Convertible Debt Financing Registration
Statement (the “Exercise Date”) and may be exercised at any time
prior to their expiration. Holders of the Financing Warrants may
exercise their Financing Warrants, at their election, by paying the
Exercise Price in cash or on a cashless exercise basis. On each of
the first 12 monthly anniversaries of the Exercise Date, 1/12th of
the Financing Warrants will expire.
The Financing Warrants will have customary anti-dilution
adjustments to be determined in accordance with the requirements of
the applicable stock exchanges, including the TSX.
The terms of the Financing Warrants restrict the exercise of
Financing Warrants by an Investor if such an exercise would cause
the Investor to exceed certain beneficial ownership thresholds in
NioCorp or such an exercise would cause the aggregate number of
Common Shares issued pursuant to the Yorkville Convertible Debt
Financing Agreement to exceed the thresholds for issuance of Common
Shares under the rules of the TSX and Nasdaq, unless prior
shareholder approval is obtained.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of certain U.S. federal income
tax considerations applicable to a U.S. Holder (as defined below)
arising from and relating to the acquisition, ownership, and
disposition of the Common Shares. This summary is for general
information purposes only and does not purport to be a complete
analysis or listing of all potential U.S. federal income tax
considerations that may apply to a U.S. Holder arising from and
relating to the acquisition, ownership, and disposition of Common
Shares. In addition, this summary does not take into account the
individual facts and circumstances of any particular U.S. Holder
that may affect the U.S. federal income tax consequences to such
U.S. Holder, including, without limitation, specific tax
consequences to a U.S. Holder under an applicable income tax
treaty. Accordingly, this summary is not intended to be, and should
not be construed as, legal or U.S. federal income tax advice with
respect to any U.S. Holder. This summary does not address any tax
consequences to U.S. Holders of the acquisition, ownership, and
disposition of Common Shares arising from the U.S. federal
alternative minimum tax or the Medicare tax on investment income,
U.S. federal estate, gift and other non-income taxes, U.S. state
and local taxes, or any non-U.S. tax. In addition, except as
specifically set forth below, this summary does not discuss
applicable tax reporting requirements. Each prospective U.S. Holder
should consult its own tax advisors regarding the U.S. federal,
U.S. federal alternative minimum, U.S. federal estate and gift,
U.S. state and local, and non-U.S. tax consequences relating to the
acquisition, ownership and disposition of the Common Shares.
No legal opinion from U.S. legal counsel or ruling from the IRS has
been requested, or will be obtained, regarding the U.S. federal
income tax consequences of the acquisition, ownership, and
disposition of the Common Shares. This summary is not binding on
the IRS, and the IRS is not precluded from taking a position that
is different from, and contrary to, the positions taken in this
summary. In addition, because the authorities on which this summary
is based are subject to various interpretations, the IRS and the
U.S. courts could disagree with one or more of the conclusions
described in this summary.
Scope of this Summary
Authorities
This summary is based on the Code, Treasury Regulations (whether
final, temporary, or proposed), published rulings and
administrative positions of the IRS, the Convention Between Canada
and the United States of America with Respect to Taxes on Income
and on Capital, signed September 26, 1980, as amended (the
“Canada-U.S. Tax Convention”), and U.S. court decisions that are
applicable, and, in each case, as in effect and available, as of
the date of this document. Any of the authorities on which this
summary is based could be changed in a material and adverse manner
at any time, and any such change could be applied retroactively.
This summary does not discuss the potential effects, whether
adverse or beneficial, of any proposed legislation.
U.S. Holders
For purposes of this summary, the term “U.S. Holder” means a
beneficial owner of Common Shares that is for U.S. federal income
tax purposes:
|
· |
an individual who is a citizen or
resident of the United States; |
|
· |
a corporation (or other entity
treated as a corporation for U.S. federal income tax purposes)
organized under the laws of the United States, any state thereof or
the District of Columbia; |
|
· |
an estate whose income is subject
to U.S. federal income taxation regardless of its source; or |
|
· |
a trust that (1) is subject to the
primary supervision of a court within the U.S. and the control of
one or more U.S. persons for all substantial decisions or (2) has a
valid election in effect under applicable Treasury Regulations to
be treated as a U.S. person. |
U.S. Holders Subject to Special U.S. Federal Income Tax Rules Not
Addressed
This summary does not address the U.S. federal income tax
considerations applicable to U.S. Holders that are subject to
special provisions under the Code, including, but not limited to,
U.S. Holders that: (a) are tax-exempt organizations, qualified
retirement plans, individual retirement accounts, or other
tax-deferred accounts; (b) are financial institutions,
underwriters, insurance companies, real estate investment trusts,
or regulated investment companies; (c) are broker-dealers, dealers,
or traders in securities or currencies that elect to apply a
mark-to-market accounting method; (d) have a “functional currency”
other than the U.S. dollar; (e) own Common Shares as part of a
straddle, hedging transaction, conversion transaction, constructive
sale, or other arrangement involving more than one position; (f)
acquire Common Shares in connection with the exercise of employee
stock options or otherwise as compensation for services; (g) hold
Common Shares other than as a capital asset within the meaning of
Section 1221 of the Code (generally, property held for investment
purposes); or (h) own, have owned or will own (directly,
indirectly, or by attribution) 10% or more of the total combined
voting power of the outstanding shares of the Company. This summary
also does not address the U.S. federal income tax considerations
applicable to U.S. Holders who are: (a) U.S. expatriates or former
long-term residents of the U.S.; (b) persons that have been, are,
or will be a resident or deemed to be a resident in Canada for
purposes of the Income Tax Act (Canada) (the “Tax Act”); (c)
persons that use or hold, will use or hold, or that are or will be
deemed to use or hold Common Shares in connection with carrying on
a business in Canada; (d) persons whose Common Shares constitute
“taxable Canadian property” under the Tax Act; or (e) persons that
have a permanent establishment in Canada for the purposes of the
Canada-U.S. Tax Convention. U.S. Holders that are subject to
special provisions under the Code, including, but not limited to,
U.S. Holders described immediately above, should consult their own
tax advisors regarding tax consequences relating to the
acquisition, ownership and disposition of Common Shares.
If an entity or arrangement that is classified as a partnership (or
other “pass-through” entity) for U.S. federal income tax purposes
holds Common Shares, the U.S. federal income tax consequences to
such entity or arrangement and the partners (or other owners or
participants) of such entity or arrangement generally will depend
on the activities of the entity or arrangement and the status of
such partners (or owners or participants). This summary does not
address the tax consequences to any such partner (or owner or
participants). Partners (or other owners or participants) of
entities or arrangements that are classified as partnerships or as
“pass-through” entities for U.S. federal income tax purposes should
consult their own tax advisors regarding the U.S. federal income
tax consequences arising from and relating to the acquisition,
ownership, and disposition of Common Shares.
General Rules Applicable to the Ownership and Disposition of Common
Shares
A U.S. Holder that receives a distribution, including a
constructive distribution, with respect to a Common Share will be
required to include the amount of such distribution in gross income
as a dividend (without reduction for any Canadian income tax
withheld from such distribution) to the extent of the current and
accumulated “earnings and profits” of the Company, as computed for
U.S. federal income tax purposes. To the extent that a distribution
exceeds the current and accumulated “earnings and profits” of the
Company, such distribution will be treated, first, as a tax-free
return of capital to the extent of a U.S. Holder’s tax basis in the
Common Shares and thereafter as gain from the sale or exchange of
such Common Shares. However, the Company may not maintain the
calculations of its earnings and profits in accordance with U.S.
federal income tax principles, and U.S. Holders may have to assume
that any distribution by the Company with respect to the Common
Shares will constitute ordinary dividend income. Dividends received
on Common Shares by a corporate U.S. Holder (other than certain 10%
corporate shareholders) generally will not be eligible for a
“dividends received deduction.” Provided that (1) the Company is
eligible for the benefits of the Canada-U.S. Tax Convention or (2)
the Common Shares are readily tradable on a United States
securities market (and certain holding period and other conditions
are satisfied), dividends paid by the Company to non-corporate U.S.
Holders , including individuals, will be eligible for the
preferential tax rates applicable to long-term capital gains for
dividends unless the Company is classified as a PFIC in the tax
year of distribution or in the preceding tax year. See “—Passive
Foreign Investment Company Rules—Risk of PFIC Status for the
Company” below. The dividend rules are complex, and each U.S.
Holder should consult its own tax advisors regarding the
application of such rules.
Upon the sale or other taxable disposition of Common Shares,
subject to the potential application of the PFIC rules as described
below, a U.S. Holder generally will recognize capital gain or loss
in an amount equal to the difference between the U.S. dollar value
of cash received plus the fair market value of any property
received and such U.S. Holder’s tax basis in such Common Shares
sold or otherwise disposed of. A U.S. Holder’s tax basis in
Common
Shares generally will be determined initially by the holder’s U.S.
dollar cost for the Common Shares (subject to any adjustments
provided under the PFIC rules, described below). Subject again to
the PFIC rules, gain or loss recognized on such sale or other
disposition generally will be long-term capital gain or loss if, at
the time of the sale or other disposition, the Common Shares have
been held for more than one year. Any gain or loss will generally
be U.S. source for U.S. foreign tax credit purposes.
Preferential tax rates currently apply to long-term capital gain of
a U.S. Holder that is an individual, estate, or trust. There are
currently no preferential tax rates for long-term capital gain of a
U.S. Holder that is a corporation. Deductions for capital losses
are subject to significant limitations under the Code. If the
Company is determined to be a PFIC, any gain realized on the Common
Shares could be ordinary income under the rules discussed
below.
Passive Foreign Investment Company Rules
Risk of PFIC Status for the Company
If the Company were to constitute a PFIC under the meaning of
Section 1297 of the Code for any taxable year during a U.S.
Holder’s holding period, then certain potentially adverse rules may
affect the U.S. federal income tax consequences to a U.S. Holder as
a result of the acquisition, ownership and disposition of Common
Shares. While this summary cannot describe all of the potentially
adverse consequences that would result if the Company were treated
as a PFIC for a relevant taxable year, certain material
consequences and related considerations are described below.
The Company believes that it was classified as a PFIC during the
tax years ended June 30, 2022 and 2021, but, based on the current
composition of its income and assets, as well as current business
plans and financial expectations, the Company does not currently
expect to meet the PFIC qualification tests for its current tax
year or foreseeable future tax years. No opinion of legal counsel
or ruling from the IRS concerning the status of the Company as
other than a PFIC has been obtained or is currently planned to be
requested. The determination of whether any corporation was, or
will be, a PFIC for a tax year depends, in part, on the application
of complex U.S. federal income tax rules, which are subject to
differing interpretations. In addition, whether any corporation
will be a PFIC for any tax year depends on the assets and income of
such corporation over the course of each such tax year and, as a
result, cannot be predicted with certainty as of the date of this
document. Accordingly, there can be no assurance that the IRS will
not challenge any determination made by the Company (or any
subsidiary of the Company) concerning its PFIC status in any
taxable year, or that a court will not sustain such challenge. As
described below under “—Default PFIC Rules,” the Company’s prior
PFIC status may also continue to cause the PFIC rules to apply to
persons who held Common Shares during such period and do not make
certain applicable elections. Each U.S. Holder should consult its
own tax advisors regarding the PFIC status of the Company and each
subsidiary of the Company.
In any taxable year in which the Company is classified as a PFIC, a
U.S. Holder will be required to file an annual report with the IRS
containing such information as Treasury Regulations and/or other
IRS guidance may require. IRS Form 8621 is currently used for such
filings. In addition to penalties, a failure to satisfy such
reporting requirements may result in an extension of the time
period during which the IRS can assess a tax. U.S. Holders should
consult their own tax advisors regarding the requirements of filing
such information returns under these rules, including the
requirement to file an IRS Form 8621 annually.
The Company generally would be a PFIC for a taxable year if, for
such year, (a) 75% or more of the gross income of the Company is
passive income (the “PFIC income test”) or (b) 50% or more of the
value of the Company’s assets either produce passive income or are
held for the production of passive income, based on the quarterly
average of the fair market value of such assets (the “PFIC asset
test”). “Gross income” generally includes all sales revenues less
the cost of goods sold, plus income from investments and from
incidental or outside operations or sources, and “passive income”
generally includes, for example, dividends, interest, certain rents
and royalties, certain gains from the sale of stock and securities,
and certain gains from commodities transactions.
Active business gains arising from the sale of commodities
generally are excluded from passive income if substantially all of
a foreign corporation’s business is as an active producer,
processor, merchant or handler of commodities, and certain other
requirements are satisfied.
For purposes of the PFIC income test and PFIC asset test described
above, if the Company owns, directly or indirectly, 25% or more of
the total value of the outstanding shares of another corporation,
the Company will be treated as if it (a) held a proportionate share
of the assets of such other corporation and (b) received directly a
proportionate share of the income of such other corporation. In
addition, for purposes of the PFIC income test and PFIC asset test
described above, and assuming certain other requirements are met,
“passive income” does not include certain interest, dividends,
rents, or royalties that are received or accrued by the Company
from certain “related persons” (as defined in Section 954(d)(3) of
the Code) also organized in Canada, to the extent such items are
properly allocable to the income of such related person that is
neither passive income nor income connected with a U.S. trade or
business.
Under certain attribution rules, if the Company is a PFIC, U.S.
Holders will generally be deemed to own their proportionate share
of the Company’s direct or indirect equity interest in any company
that is also a PFIC (a “Subsidiary PFIC”), and will generally be
subject to U.S. federal income tax on their proportionate share of
(a) any “excess distributions,” as described below, on the stock of
a Subsidiary PFIC and (b) a disposition or deemed disposition of
the stock of a Subsidiary PFIC by the Company or another Subsidiary
PFIC, both as if such U.S. Holders directly held the shares of such
Subsidiary PFIC. In addition, U.S. Holders may be subject to U.S.
federal income tax on any indirect gain realized on the stock of a
Subsidiary PFIC on the sale or disposition of Common Shares.
Accordingly, U.S. Holders should be aware that they could be
subject to tax under the PFIC rules even if no distributions are
received on the Common Shares and no redemptions or other
dispositions of Common Shares are made.
Default PFIC Rules
If the Company is a PFIC for any tax year during which a U.S.
Holder owns Common Shares, the U.S. federal income tax consequences
to such U.S. Holder of the acquisition, ownership, and disposition
of Common Shares will depend on whether and when such U.S. Holder
makes an election to treat the Company and each Subsidiary PFIC, if
any, as a “qualified electing fund” (“QEF”) under Section 1295 of
the Code (a “QEF Election”) or makes a mark-to-market election
under Section 1296 of the Code (a “Mark-to-Market Election”). A
U.S. Holder that does not make either a QEF Election or a
Mark-to-Market Election will be referred to in this summary as a
“Non-Electing U.S. Holder.”
A Non-Electing U.S. Holder will be subject to the rules of Section
1291 of the Code (described below) with respect to (a) any gain
recognized on the sale or other taxable disposition of Common
Shares and (b) any “excess distribution” received on the Common
Shares. A distribution generally will be an “excess distribution”
to the extent that such distribution (together with all other
distributions received in the current tax year) exceeds 125% of the
average distributions received during the three preceding tax years
(or during a U.S. Holder’s holding period for the Common Shares, if
shorter).
If the Company is a PFIC, under Section 1291 of the Code, any gain
recognized on the sale or other taxable disposition of Common
Shares (including an indirect disposition of the stock of any
Subsidiary PFIC), and any “excess distribution” received on Common
Shares or deemed received with respect to the stock of a Subsidiary
PFIC, must be ratably allocated to each day in a Non-Electing U.S.
Holder’s holding period for the respective Common Shares. The
amount of any such gain or excess distribution allocated to the tax
year of disposition or distribution of the excess distribution, or
allocated to years before the entity became a PFIC, if any, would
be taxed as ordinary income at the rates applicable for such year
(and not eligible for certain preferred rates). The amounts
allocated to any other tax year would be subject to U.S. federal
income tax at the highest tax rate applicable to ordinary income in
each such year. In addition, an interest charge would be imposed on
the tax liability for each such year, calculated as if such tax
liability had been due in each such year. A Non-Electing U.S.
Holder that is not a corporation must treat any such interest paid
as “personal interest,” which is not deductible.
If the Company is a PFIC for any tax year during which a
Non-Electing U.S. Holder holds Common Shares, the Company will
continue to be treated as a PFIC with respect to such Non-Electing
U.S. Holder, regardless of whether the Company ceases to be a PFIC
in one or more subsequent tax years. A Non-Electing U.S. Holder may
terminate this deemed PFIC status by making a “purging” election to
recognize gain (which will be taxed under the rules of Section 1291
of the Code discussed above), but not loss, as if such Common
Shares were sold on the last day of the last tax year for which the
Company was a PFIC.
In addition to the rules described above applying to “excess
distributions” and certain other dispositions of Common Shares,
certain other adverse U.S. federal income tax rules may apply with
respect to a U.S. Holder if the Company is a PFIC, including in
some cases even if the U.S. Holder makes a QEF Election (as
described below). Each U.S. Holder should consult its own tax
advisors regarding the full tax consequences of potential PFIC
status for the Company and each subsidiary of the Company.
QEF Election
If the Company is a PFIC and a U.S. Holder that makes a timely and
effective QEF Election for the tax year in which the holding period
of its Common Shares begins generally will not be subject to the
rules of Section 1291 of the Code discussed above with respect to
such Common Shares. A U.S. Holder that makes such a QEF Election
will be subject to U.S. federal income tax on such U.S. Holder’s
pro rata share (based on its ownership of Common Shares) of (a) the
net capital gain of the Company, which will be taxed as long-term
capital gain to such U.S. Holder, and (b) the ordinary earnings of
the Company, which will be taxed as ordinary income to such U.S.
Holder. Generally, “net capital gain” is the excess of (a) net
long-term capital gain over (b) net short-term capital loss, and
“ordinary earnings” are the excess of (a) “earnings and profits”
over (b) net capital gain. A U.S. Holder that makes a QEF Election
will be subject to U.S. federal income tax on such amounts for each
tax year in which the Company is a PFIC, regardless of whether such
amounts are actually distributed to such U.S. Holder by the
Company. However, for any tax year in which the Company is a PFIC
and has no net income or gain, U.S. Holders that have made a QEF
Election would not have any income inclusions as a result of the
QEF Election. If a U.S. Holder that made a QEF Election has an
income inclusion, such a U.S. Holder may, subject to certain
limitations, elect to defer payment of current U.S. federal income
tax on such amounts, subject to an interest charge. If such U.S.
Holder is not a corporation, any such interest paid will be treated
as “personal interest,” which is not deductible.
A U.S. Holder that makes a timely and effective QEF Election with
respect to the Company generally (a) may receive a tax-free
distribution from the Company to the extent that such distribution
represents “earnings and profits” of the Company that were
previously included in income by the U.S. Holder because of such
QEF Election and (b) will adjust such U.S. Holder’s tax basis in
the Common Shares to reflect the amount included in income or
allowed as a tax-free distribution because of such QEF Election. A
U.S. Holder that makes a QEF Election generally will recognize
capital gain or loss on the sale or other taxable disposition of
Common Shares.
A U.S. Holder may make a timely QEF Election by filing the
appropriate QEF Election documents (currently IRS Form 8621) at the
time such U.S. Holder files a U.S. federal income tax return for
such year. If a U.S. Holder does not make a timely QEF Election for
the first year in the U.S. Holder’s holding period in which the
Company is a PFIC, the U.S. Holder may still be able to make an
effective QEF Election in a subsequent year if such U.S. Holder
meets certain requirements and makes a “purging” election to
recognize gain (which will be taxed under the rules of Section 1291
of the Code discussed above) as if such Common Shares were sold for
their fair market value on the day the QEF Election is effective.
If a U.S. Holder makes a QEF Election but does not make a “purging”
election to recognize gain as discussed in the preceding sentence,
then such U.S. Holder shall be subject to the QEF Election rules
and shall continue to be subject to tax under the rules of Section
1291 discussed above with respect to its Common Shares. If a U.S.
Holder owns PFIC stock indirectly through another PFIC, separate
QEF Elections must be made for the PFIC in which the U.S. Holder is
a direct shareholder and the Subsidiary PFIC for the QEF rules to
apply to both PFICs.
A QEF Election will apply to the tax year for which such QEF
Election is timely made and to all subsequent tax years, unless
such QEF Election is invalidated or terminated or the IRS consents
to revocation of such QEF Election. If a U.S. Holder makes a QEF
Election and, in a subsequent tax year, the Company ceases to be a
PFIC, the QEF Election will remain in effect (although it will not
be applicable) during those tax years in which the Company is not a
PFIC. Accordingly, if the Company becomes a PFIC in another
subsequent tax year, the QEF Election will be effective, and the
U.S. Holder will be subject to the QEF rules described above during
any subsequent tax year in which the Company qualifies as a
PFIC.
The Company will endeavor to provide U.S. Holders with the required
information to allow U.S. Holders to make a QEF Election with
respect to the Common Shares in the event that the Company
determines it is treated as a PFIC for any taxable year. There can
be no assurance, however, that the Company will timely provide such
information for any particular year, or that the Company’s
determination regarding its PFIC status will be upheld.
U.S.
Holders should consult their tax advisors to determine whether any
of these QEF Elections will be available and if so, what the
consequences of these elections would be in their particular
circumstances.
A U.S. Holder makes a QEF Election by attaching a completed IRS
Form 8621, including a PFIC Annual Information Statement, to a
timely filed United States federal income tax return. However, if
the Company does not timely provide the required information with
regard to the Company or any of its Subsidiary PFICs, U.S. Holders
may not be able to make a QEF Election for such entity and, unless
they make the Mark-to-Market Election discussed in the next
section, will continue to be subject to the rules of Section 1291
of the Code discussed above that apply to Non-Electing U.S. Holders
with respect to the taxation of gains and excess distributions.
Mark-to-Market Election
A U.S. Holder may make a Mark-to-Market Election only if the Common
Shares are marketable stock. The Common Shares generally will be
“marketable stock” if the Common Shares are regularly traded on (a)
a national securities exchange that is registered with the
Securities and Exchange Commission, (b) the national market system
established pursuant to section 11A of the Exchange Act, or (c) a
foreign securities exchange that is regulated or supervised by a
governmental authority of the country in which the market is
located, provided that the foreign exchange meets certain trading
volume and other requirements. If such stock is traded on such a
qualified exchange or other market, such stock generally will be
“regularly traded” for any calendar year during which such stock is
traded, other than in de minimis quantities, on at least 15 days
during each calendar quarter. The Company expects that the Common
Shares will meet the definition of “marketable stock,” although
there can be no assurance of this, especially as regards the
required trading frequency.
If a U.S. Holder that makes a Mark-to-Market Election for any
taxable year with respect to its Common Shares, it generally will
not be subject to the rules of Section 1291 of the Code discussed
above with respect to such Common Shares for such taxable year.
However, if a U.S. Holder does not make a Mark-to-Market Election
beginning in the first tax year of such U.S. Holder’s holding
period for which the Company is a PFIC and such U.S. Holder has not
made a timely QEF Election, the rules of Section 1291 of the Code
discussed above will apply to dispositions of, and certain
distributions on, the Common Shares.
A U.S. Holder that makes a Mark-to-Market Election will include in
ordinary income, for each tax year in which the Company is a PFIC,
an amount equal to the excess, if any, of (a) the fair market value
of the Common Shares, as of the close of such tax year over (b)
such U.S. Holder’s adjusted tax basis in such Common Shares. A U.S.
Holder that makes a Mark-to-Market Election will be allowed a
deduction in an amount equal to the excess, if any, of (a) such
U.S. Holder’s adjusted tax basis in the Common Shares, over (b) the
fair market value of such Common Shares (but only to the extent of
the net amount of previously included income as a result of the
Mark-to-Market Election for prior tax years).
A U.S. Holder that makes a Mark-to-Market Election will also
generally adjust its tax basis in the Common Shares to reflect the
amount included in gross income or allowed as a deduction because
of such Mark-to-Market Election. Upon a sale or other taxable
disposition of Common Shares, a U.S. Holder that makes a
Mark-to-Market Election will recognize ordinary income or ordinary
loss (and such ordinary loss may be treated as capital or subject
to limitations in certain cases).
A U.S. Holder makes a Mark-to-Market Election by attaching a
completed IRS Form 8621 to a timely filed United States federal
income tax return. A Mark-to-Market Election applies to the tax
year in which such Mark-to-Market Election is made and to each
subsequent tax year, unless the Common Shares cease to be
“marketable stock” or the IRS consents to revocation of such
election. Each U.S. Holder should consult its own tax advisors
regarding the requirements for, and procedure for making, a
Mark-to-Market Election.
Although a U.S. Holder may be eligible to make a Mark-to-Market
Election with respect to the Common Shares, no such election may be
made with respect to the stock of any Subsidiary PFIC that a U.S.
Holder is treated as owning, because such stock is not marketable.
Hence, the Mark-to-Market Election will not be effective to avoid
the application of the default rules of Section 1291 of the Code
described above with respect to deemed dispositions of Subsidiary
PFIC stock or excess distributions from a Subsidiary PFIC to its
shareholder.
AS THE PFIC RULES ARE COMPLEX AND UNCERTAIN, U.S. HOLDERS SHOULD
CONSULT WITH THEIR TAX ADVISORS TO DETERMINE THE POTENTIAL
APPLICATION OF THE PFIC RULES TO THEM AND THEIR COMMON SHARES AND
ANY RESULTANT TAX CONSEQUENCES.
Additional Considerations
Receipt of Foreign Currency
The amount of any distribution paid to a U.S. Holder in foreign
currency, or on the sale, exchange or other taxable disposition of
Common Shares, generally will be equal to the U.S. dollar value of
such foreign currency based on the exchange rate applicable on the
date of receipt (regardless of whether such foreign currency is
converted into U.S. dollars at that time). A U.S. Holder will have
a basis in the foreign currency equal to its U.S. dollar value on
the date of receipt. Any U.S. Holder who converts or otherwise
disposes of the foreign currency after the date of receipt may have
a foreign currency exchange gain or loss that would be treated as
ordinary income or loss, and generally will be U.S. source income
or loss for foreign tax credit purposes. Different rules apply to
U.S. Holders who use the accrual method of tax accounting. Each
U.S. Holder should consult its own U.S. tax advisors regarding the
U.S. federal income tax consequences of receiving, owning, and
disposing of foreign currency.
Foreign Tax Credit
Subject to the potential application of the PFIC rules discussed
above, a U.S. Holder that pays (whether directly or through
withholding) Canadian income tax with respect to dividends paid on
the Common Shares generally will be entitled, at the election of
such U.S. Holder, to receive either a deduction or a credit for
such Canadian income tax. Generally, a credit will reduce a U.S.
Holder’s U.S. federal income tax liability on a dollar-for-dollar
basis, whereas a deduction will reduce a U.S. Holder’s income that
is subject to U.S. federal income tax. This election is made on a
year-by-year basis and applies to all foreign taxes paid (whether
directly or through withholding) by a U.S. Holder during a
year.
Complex limitations apply to the foreign tax credit, including the
general limitation that the credit cannot exceed the proportionate
share of a U.S. Holder’s U.S. federal income tax liability that
such U.S. Holder’s “foreign source” taxable income bears to such
U.S. Holder’s worldwide taxable income. In applying this
limitation, a U.S. Holder’s various items of income and deduction
must be classified, under complex rules, as either “foreign source”
or “U.S. source.” Generally, dividends paid on the Common Shares
should be treated as foreign source for this purpose, and gains
recognized on the sale of Common Shares by a U.S. Holder should be
treated as U.S. source for this purpose, except as otherwise
provided in an applicable income tax treaty, and if an election is
properly made under the Code. However, the amount of a distribution
with respect to the Common Shares that is treated as a “dividend”
may be lower for U.S. federal income tax purposes than it is for
Canadian federal income tax purposes, resulting in a reduced
foreign tax credit allowance to a U.S. Holder. In addition, this
limitation is calculated separately with respect to specific
categories of income. The foreign tax credit rules are complex, and
each U.S. Holder should consult its own U.S. tax advisors regarding
the foreign tax credit rules.
Information Reporting and Backup Withholding
Certain U.S. Holders may be subject to certain reporting
obligations with respect to Common Shares if the aggregate value of
these and certain other “specified foreign financial assets”
exceeds an applicable dollar threshold. If required, this
disclosure is made by filing Form 8938 with the IRS. Significant
penalties can apply if a U.S. Holder is required to make this
disclosure and fail to do so. In addition, a U.S. Holder should
consider the possible obligation to file online a FinCEN Form
114—Foreign Bank and Financial Accounts Report, as a result of
holding Common Shares in certain accounts. Holders are urged to
consult their U.S. tax advisors with respect to these and other
reporting requirements that may apply to their acquisition of
Common Shares.
Dividend payments (including constructive dividends) with respect
to Common Shares and proceeds from the sale, exchange or redemption
of Common Shares may be subject to information reporting to the IRS
and possible United States backup withholding. Backup withholding
(currently at a rate of 24%) will not apply, however, to a U.S.
Holder who furnishes a correct taxpayer identification number
(generally on an IRS Form W-9 provided to the paying agent of the
U.S. Holder’s broker) and makes other required certifications, or
who is otherwise exempt from backup withholding and establishes
such exempt status. Backup withholding is not an additional tax.
Any amounts
withheld under the U.S. backup withholding tax rules may be allowed
as a credit against a U.S. Holder’s U.S. federal income tax
liability, if any, provided the required information is timely
furnished to the IRS.
THE
ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF
ALL TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS WITH RESPECT TO
THE ACQUISITION, OWNERSHIP, AND DISPOSITION OF COMMON SHARES. U.S.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX
CONSIDERATIONS APPLICABLE TO THEM IN THEIR OWN PARTICULAR
CIRCUMSTANCES.
Certain Canadian federal Income Tax Considerations for U.S.
Residents
The following generally summarizes certain Canadian federal income
tax consequences generally applicable under the Income Tax Act
(Canada) and the regulations enacted thereunder (collectively, the
“Canadian Tax Act”) and the Canada-United States Tax Convention
(1980) (the “Convention”) to the holding and disposition of Common
Shares.
Comment is restricted to holders of Common Shares each of whom, at
all material times for the purposes of the Canadian Tax Act and the
Convention, (i) is resident solely in the United States for tax
purposes, (ii) is a “qualifying person” under and entitled to the
benefits of the Convention, (iii) holds all Common Shares as
capital property, (iii) holds no Common Shares that are “taxable
Canadian property” (as defined in the Canadian Tax Act) of the
holder, (iv) deals at arm’s length with and is not affiliated with
NioCorp, (v) does not and is not deemed to use or hold any Common
Shares in a business carried on in Canada, (vi) is not an insurer
that carries on business in Canada and elsewhere, and (vii) is not
an “authorized foreign bank” (as defined in the Canadian Tax Act)
(each such holder, a “U.S. Resident Holder”).
Certain U.S.-resident entities that are fiscally transparent for
United States federal income tax purposes (including limited
liability companies) may not in all circumstances be entitled to
the benefits of the Convention. Members of or holders of an
interest in such an entity that holds Common Shares should consult
their own tax advisers regarding the extent, if any, to which the
benefits of the Convention will apply to the entity in respect of
its Common Shares.
Generally, a U.S. Resident Holder’s Common Shares will be
considered to be capital property of such holder provided that the
U.S. Resident Holder is not a trader or dealer in securities, did
not acquire, hold, or dispose of the Common Shares in one or more
transactions considered to be an adventure or concern in the nature
of trade (i.e., speculation), and does not hold the Common Shares
in the course of carrying on a business.
This summary is based on the current provisions of the Canadian Tax
Act and the Convention in effect on the date hereof, all specific
proposals to amend the Canadian Tax Act and Convention publicly
announced by or on behalf of the Minister of Finance (Canada) on or
before the date hereof, and the current published administrative
and assessing policies of the Canada Revenue Agency (the “CRA”). It
is assumed that all such amendments will be enacted as currently
proposed, and that there will be no other material change to any
applicable law or administrative or assessing practice, whether by
way of judicial, legislative or governmental decision or action,
although no assurance can be given in these respects. This summary
is not exhaustive of all possible Canadian federal income tax
considerations. Except as otherwise expressly provided, this
summary does not take into account any provincial, territorial, or
foreign tax considerations, which may differ materially from those
set out herein.
This summary is of a general nature only, is not exhaustive
of all possible Canadian federal income tax considerations, and is
not intended to be and should not be construed as legal or tax
advice to any particular U.S. Resident Holder. U.S. Resident
Holders are urged to consult their own tax advisers for advice with
respect to their particular circumstances. The discussion below is
qualified accordingly.
Generally, a U.S. Resident Holder’s Common Shares will not
constitute “taxable Canadian property” of such holder at a
particular time at which the Common Shares are listed on a
“designated stock exchange” (which currently includes the TSX and
the Nasdaq) unless both of the following conditions are
concurrently met:
|
i. |
at any time during the 60-month period that ends at the
particular time, 25% or more of the issued shares of any class of
the capital stock of NioCorp were owned by or belonged to one or
any combination of |
|
A. |
the U.S. Resident Holder, |
|
B. |
persons with whom the U.S. Resident Holder did not deal at
arm’s length, and |
|
C. |
partnerships in which the U.S. Resident Holder or a person
referred to in clause (B) holds a membership interest directly or
indirectly through one or more partnerships, and |
|
ii. |
at any time during the 60-month period that ends at the
particular time, more than 50% of the fair market value of the
Common Shares was derived directly or indirectly from, one or any
combination of, real or immovable property situated in Canada,
“Canadian resource properties” (as defined in the Canadian Tax
Act), “timber resource properties” (as defined in the Canadian Tax
Act), or options in respect of, or interests in any of the
foregoing, whether or not the property exists. |
Common Shares may also be deemed to be “taxable Canadian property”
in certain circumstances set out in the Canadian Tax Act.
A U.S. Resident Holder who disposes or is deemed to dispose of one
or more Common Shares generally should not thereby incur any
liability for Canadian federal income tax in respect of any capital
gain arising as a consequence of the disposition.
A U.S. Resident Holder to whom NioCorp pays or credits or is deemed
to pay or credit a dividend on such holder’s Common Shares will be
subject to Canadian withholding tax, and NioCorp will be required
to withhold the tax from the dividend and remit it to the CRA for
the holder’s account. The rate of withholding tax under the
Canadian Tax Act is 25% of the gross amount of the dividend, but
should generally be reduced under the Convention to 15% (or, if the
U.S. Resident Holder is a company which is the beneficial owner of
at least 10% of the voting stock of NioCorp, 5%) of the gross
amount of the dividend. For this purpose, a company that is a
resident of the United States for purposes of the Canadian Tax Act
and the Convention and is entitled to the benefits of the
Convention shall be considered to own the voting stock of NioCorp
owned by an entity that is considered fiscally transparent under
the laws of the United States and that is not a resident of Canada,
in proportion to such company’s ownership interest in that
entity.
PLAN OF DISTRIBUTION
The Common Shares offered by this prospectus may be sold or
distributed from time to time by the Selling Shareholder directly
to one or more purchasers or through brokers, dealers, or
underwriters who may act solely as agents at market prices
prevailing at the time of sale, at prices related to the prevailing
market prices, at negotiated prices, or at fixed prices, which may
be changed. The sale of the Common Shares offered by this
prospectus may be effected in one or more of the following
methods:
|
· |
ordinary brokers’ transactions; |
|
· |
transactions involving cross or block trades; |
|
· |
through brokers, dealers, or underwriters who may act solely as
agents; |
|
· |
“at the market” into an existing market for the Common
Shares; |
|
· |
in other ways not involving market makers or established
business markets, including direct sales to purchasers or sales
effected through agents; |
|
· |
in privately negotiated transactions; or |
|
· |
any combination of the foregoing. |
In order to comply with the securities laws of certain states, if
applicable, the Common Shares offered by this prospectus may be
sold only through registered or licensed brokers or dealers. In
addition, in certain states, the Common Shares offered by this
prospectus may not be sold unless they have been registered or
qualified for sale in the state or an exemption from the
registration or qualification requirement is available and complied
with.
The Selling Shareholder may transfer the Common Shares offered by
this prospectus by other means not described in this
prospectus.
Brokers, dealers, underwriters, or agents participating in the
distribution of the shares as agents may receive compensation in
the form of commissions, discounts, or concessions from the selling
stockholder and/or purchasers of the Common Shares offered by this
prospectus for whom the broker-dealers may act as agent. YA has
informed us that each such broker-dealer will receive commissions
from YA which will not exceed customary brokerage commissions.
The Selling Shareholder and its affiliates have agreed not to
engage in any direct or indirect short selling or hedging of our
Common Shares during the term of the Purchase Agreement.
The Selling Shareholder is an “underwriter” within the meaning of
the Securities Act.
We have advised the Selling Shareholder that while it is engaged in
a distribution of the shares included in this prospectus, it is
required to comply with Regulation M promulgated under the Exchange
Act. With certain exceptions, Regulation M precludes the selling
stockholder, any affiliated purchasers, and any broker-dealer or
other person who participates in the distribution from bidding for
or purchasing, or attempting to induce any person to bid for or
purchase, any security which is the subject of the distribution
until the entire distribution is complete. Regulation M also
prohibits any bids or purchases made in order to stabilize the
price of a security in connection with the distribution of that
security. All of the foregoing may affect the marketability of the
Common Shares offered by this prospectus.
We will pay the expenses incident to the registration under the
Securities Act of the offer and sale of the Common Shares covered
by this prospectus by the Selling Shareholder. We estimate that our
total expenses for the offering will be approximately $235,064
(excluding the Commitment Shares and the Cash Fee). As
consideration for its irrevocable commitment to purchase Advance
Shares under the Purchase Agreement, we will issue $650,000 of
Commitment Shares to the Selling Shareholder. Additionally, we will
pay to the Selling Shareholder an aggregate Cash Fee of $1,500,000,
including $500,000 on the Closing Date and the remainder in
installments over a 12-month
period
following the Closing Date, provided that, we will have the right
to prepay without penalty all or part of the Cash Fee at any time.
We also paid a $15,000 structuring fee to an affiliate of the
Selling Shareholder in connection with the entry into the Purchase
Agreement.
We may suspend the sale of Common Shares by the Selling Shareholder
pursuant to this prospectus for certain periods of time for certain
reasons, including if the prospectus is required to be supplemented
or amended to include additional material information.
This offering as it relates to YA will terminate on the date that
all Common Shares offered by this prospectus have been sold by
YA.
The Common Shares covered by this prospectus will not be qualified
for distribution by prospectus in any jurisdiction of Canada, and
may not be offered for sale, sold, assigned or transferred in any
jurisdiction of Canada except pursuant to a prospectus or exemption
from the prospectus requirement under applicable securities laws in
Canada. The Selling Shareholder shall not offer or sell any Common
Shares directly or indirectly to any person whom, to the Selling
Shareholder’s knowledge, is resident or located in a jurisdiction
of Canada or acquiring such Common Shares for the benefit of
another person resident or located in a jurisdiction of Canada, or
on any “marketplace” (as such term is defined in National
Instrument 21-101 Marketplace Operation) in Canada.
LEGAL MATTERS
The validity of the Common Shares offered by this prospectus will
be passed upon for us by Blake, Cassels & Graydon LLP,
Vancouver, British Columbia, Canada.
EXPERTS
The consolidated financial statements of NioCorp Developments Ltd.
as of June 30, 2022 and 2021 and for each of the three years in the
period ended June 30, 2022, incorporated by reference in this
prospectus and in the registration statement have been so
incorporated in reliance on the report of BDO USA, LLP, an
independent registered public accounting firm, incorporated herein
by reference given on the authority of said firm as experts in
auditing and accounting. The report on the consolidated financial
statements contains an explanatory paragraph regarding NioCorp
Developments Ltd.’s ability to continue as a going concern.
The financial statements of GX Acquisition Corp. II as of December
31, 2022 and 2021 and for the years ended December 31, 2022 and
2021, have been audited by Marcum LLP, an independent registered
public accounting firm, as set forth in their report (which
contains an explanatory paragraph relating to substantial doubt
about the ability of GX Acquisition Corp. II to continue as a going
concern as described in Note 1 to GX’s financial statements), and
are incorporated by reference in this prospectus and in the
registration statement of which this prospectus is a part have been
so incorporated in reliance on such report given upon such firm as
experts in auditing and accounting.
The technical report summary for the Elk Creek Project prepared in
accordance with subpart 1300 of Regulation S-K (the “S-K 1300 Elk
Creek Technical Report Summary”), which is incorporated by
reference in this prospectus, and the information summarized or
quoted from the S-K 1300 Elk Creek Technical Report Summary
included or incorporated by reference in this prospectus have been
so included or incorporated by reference with the consent of the
following qualified persons, as such term is defined in Item 1300
of Regulation S-K, who prepared the S-K 1300 Elk Creek Technical
Report Summary and reviewed and approved such information
summarized or quoted therefrom included or incorporated by
reference in this prospectus: Dahrouge Geological Consulting USA
Ltd.; Understood Mineral Resources Ltd.; Optimize Group; Tetra
Tech; Adrian Brown Consultants Inc.; Metallurgy Concept Solutions;
Magemi Mining Inc.; L3 Process Development; Olsson; A2GC; Scott
Honan, M.Sc, SME-RM, NioCorp; Everett Bird, P.E., Cementation; Matt
Hales, P.E., Cementation; Mahmood Khwaja, P.E., CDM Smith; Martin
Lepage, P.Eng, Ing., Cementation; and Wynand Marx, M.Eng, BBE
Consulting. A matrix of the sections of the S-K 1300 Elk Creek
Technical Report Summary for which each qualified person is
responsible is included in the S-K 1300 Elk Creek Technical Report
Summary. Except for Scott Honan, none of the qualified persons is
affiliated with NioCorp. Mr. Honan is the Chief Operating Officer
of NioCorp.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the fees and expenses payable by us
in connection with the sale and distribution of the securities
being registered hereby. None of the expenses listed below are to
be borne by the selling shareholder named in the prospectus that
forms a part of this registration statement. All amounts are
estimates, except for the SEC registration fee:
|
Amount to be paid |
SEC
registration fee |
$ |
7,564.29 |
|
Legal fees and
expenses* |
|
200,000.00 |
|
Accounting fees
and expenses* |
|
25,000.00 |
|
Printing expenses* |
|
2,500.00 |
|
Total |
$ |
235,064.29 |
|
|
* |
Except for the SEC registration
fee, estimated solely for the purposes of this Item 14. Actual
expenses may vary. |
Item 15. Indemnification of Directors and Officers
The corporate laws of British Columbia allow NioCorp, and its
corporate articles require it (subject to the provisions of the
Business Corporations Act of British Columbia (“BCBCA”) noted below
and the undertakings provided in Item 17 below), to indemnify its
directors, former directors, alternate directors and their heirs
and legal personal representatives against all eligible penalties
to which such person is or may be liable, and NioCorp must, after
the final disposition of an eligible proceeding, pay the expenses
actually and reasonably incurred by such person in respect of that
proceeding. Each director and alternate director is deemed to have
contracted with NioCorp on the terms of the indemnity contained in
NioCorp’s articles.
For the purposes of such an indemnification:
|
· |
“associated corporation” means a
corporation or entity referred to in paragraph (2) or (3) of the
definition of “eligible party”: |
|
· |
“eligible party,” in relation to
NioCorp, means an individual who: |
|
(1) |
is or was a director or officer of NioCorp; |
|
(2) |
is or was a director or officer of another corporation: |
|
(i) |
at a time when the corporation is or was an affiliate of
NioCorp; or |
|
(ii) |
at the request of NioCorp; or |
|
(3) |
at the request of NioCorp, is or was, or holds or held a
position equivalent to that of, a director or officer of a
partnership, trust, joint venture or other unincorporated entity;
and includes, except in the definition of “eligible proceeding” and
certain other cases, the heirs and personal or other legal
representatives of that individual; |
|
· |
“eligible penalty,” means a
judgment, penalty or fine awarded or imposed in, or an amount paid
in settlement of, an eligible proceeding; |
|
· |
“eligible proceeding” means a
proceeding in which an eligible party or any of the heirs and
personal or other legal representatives of the eligible party, by
reason of the eligible party being or having been a director or
officer of, or holding or having held a position equivalent to that
of a director or officer of, NioCorp or an associated
corporation: |
|
(1) |
is or may be joined as a party; or |
|
(2) |
is or may be liable for or in respect of a judgment, penalty or
fine in, or expenses related to, the proceeding; |
|
· |
“expenses” includes costs, charges
and expenses, including legal and other fees, but does not include
judgments, penalties, fines or amounts paid in settlement of a
proceeding; and |
|
· |
“proceeding” includes any legal
proceeding including a civil, criminal, quasi-criminal,
administrative or regulatory action or proceeding; or investigative
action, whether current, threatened, pending or completed. |
In addition, under the BCBCA, NioCorp may pay, as they are incurred
in advance of the final disposition of an eligible proceeding, the
expenses actually and reasonably incurred by an eligible party in
respect of that proceeding, provided that NioCorp first receives
from the eligible party a written undertaking that, if it is
ultimately determined that the payment of expenses is prohibited by
the restrictions noted below, the eligible party will repay the
amounts advanced.
Notwithstanding the provisions of NioCorp’s articles noted above,
NioCorp must not indemnify an eligible party or pay the expenses of
an eligible party, if any of the following circumstances apply:
|
· |
if the indemnity or payment is made
under an earlier agreement to indemnify or pay expenses and, at the
time that the agreement to indemnify or pay expenses was made,
NioCorp was prohibited from giving the indemnity or paying the
expenses by its memorandum or articles; |
|
· |
if the indemnity or payment is made
otherwise than under an earlier agreement to indemnify or pay
expenses and, at the time that the indemnity or payment is made,
NioCorp is prohibited from giving the indemnity or paying the
expenses by its memorandum or articles; |
|
· |
if, in relation to the subject
matter of the eligible proceeding, the eligible party did not act
honestly and in good faith with a view to the best interests of
NioCorp or the associated corporation, as the case may be; or |
|
· |
in the case of an eligible
proceeding other than a civil proceeding, if the eligible party did
not have reasonable grounds for believing that the eligible party’s
conduct in respect of which the proceeding was brought was
lawful. |
In addition, if an eligible proceeding is brought against an
eligible party by or on behalf of NioCorp or by or on behalf of an
associated corporation, NioCorp must not do either of the
following:
|
· |
indemnify the eligible party under
Section 160(a) of the BCBCA in respect of the proceeding; or |
|
· |
pay the expenses of the eligible
party in respect of the proceeding. |
Notwithstanding any of the foregoing, and whether or not payment of
expenses or indemnification has been sought, authorized or declined
under the BCBCA or the articles of NioCorp, on the application of
NioCorp or an eligible party, the Supreme Court of British Columbia
may do one or more of the following:
|
· |
order NioCorp to indemnify an
eligible party against any liability incurred by the eligible party
in respect of an eligible proceeding; |
|
· |
order NioCorp to pay some or all of
the expenses incurred by an eligible party in respect of an
eligible proceeding; |
|
· |
order the enforcement of, or any
payment under, an agreement of indemnification entered into by
NioCorp; |
|
· |
order NioCorp to pay some or all of
the expenses actually and reasonably incurred by any person in
obtaining an order under Section 164 of the BCBCA; or |
|
· |
make any other order the court
considers appropriate. |
Item 16. Exhibits
Exhibit No
|
Description
|
1.1(1) |
Standby Equity Purchase Agreement, dated as of January 26, 2023, by
and between NioCorp Developments Ltd. and YA II PN, Ltd. |
2.1(2) |
Business Combination Agreement, dated
as of September 25, 2022, by and among NioCorp Developments Ltd.,
Big Red Merger Sub Ltd, and GX Acquisition Corp. II |
4.1(3) |
Notice of Articles of NioCorp Developments Ltd., dated April 5,
2016 |
4.2(3) |
Articles of NioCorp Developments Ltd., as amended, effective as of
January 27, 2015 |
5.1 |
Opinion of
Blake, Cassels & Graydon LLP |
23.1 |
Consent of
Blake, Cassels & Graydon LLP (included in Exhibit 5.1) |
23.2 |
Consent of BDO
USA, LLP |
23.3 |
Consent of
Marcum LLP |
23.4 |
Consent of
Dahrouge Geological Consulting USA Ltd. |
23.5 |
Consent of
Understood Mineral Resources Ltd. |
23.6 |
Consent of
Optimize Group Inc. |
23.7 |
Consent of
Tetra Tech |
23.8 |
Consent of
Adrian Brown Consultants Inc. |
23.9 |
Consent of
Magemi Mining Inc. |
23.10 |
Consent of L3
Process Development |
23.11 |
Consent of
Olsson |
23.12 |
Consent of
A2GC |
23.13 |
Consent of
Metallurgy Concept Solutions |
23.14 |
Consent of
Scott Honan, M.Sc., SME-RM, NioCorp |
23.15 |
Consent of
Everett Bird, P.E., Cementation |
23.16 |
Consent of
Matt Hales, P.E., Cementation |
23.17 |
Consent of
Mahmood Khwaja, P.E., CDM Smith |
23.18 |
Consent of
Martin Lepage, P.Eng., Ing., Cementation |
23.19 |
Consent of
Wynand Marx, M.Eng., BBE Consulting |
|
(1) |
Previously filed as an exhibit to the registrant’s Current
Report on Form 8-K (File No. 000-55710) filed with the SEC on
January 27, 2023 and incorporated herein by reference. |
|
(2) |
Previously filed as an exhibit to the registrant’s Current Report
on Form 8-K (File No. 000-55710) filed with the SEC on September
29, 2022 and incorporated herein by reference.
|
|
(3) |
Previously filed as an exhibit to the registrant’s Draft
Registration Statement on Form S-1 (Registration No. 377-01354)
submitted to the SEC on July 26, 2016 and incorporated herein by
reference.
|
|
(4) |
Previously filed as an exhibit to the registrant’s Annual Report on
Form 10-K (File No. 000-55710) filed with the SEC on September 6,
2022 and incorporated herein by reference.
|
Item 17. Undertakings
The undersigned registrant hereby undertakes:
|
(1) |
To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement: |
|
(i) |
To include any prospectus required by Section 10(a)(3) of the
Securities Act; |
|
(ii) |
To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the SEC pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth
in the “Calculation of Registration Fee” table in the effective
registration statement; and |
|
(iii) |
To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement; |
Provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and
(a)(1)(iii) do not apply if the information required to be included
in a post-effective amendment by those paragraphs is contained in
reports filed with or furnished to the SEC by the registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that
are incorporated by reference in the registration statement, or is
contained in a form of prospectus filed pursuant to Rule 424(b)
that is part of the registration statement.
|
(2) |
That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof. |
|
(3) |
To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering. |
|
(4) |
That, for the purpose of determining liability under the
Securities Act to any purchaser: |
|
(i) |
Each prospectus filed by the registrant pursuant to Rule
424(b)(3) shall be deemed to be part of the registration statement
as of the date the filed prospectus was deemed part of and included
in the registration statement; and |
|
(ii) |
Each prospectus required to be filed pursuant to Rule
424(b)(2), (b)(5) or (b)(7) as part of a registration statement in
reliance on Rule 430B relating to an offering made pursuant to Rule
415(a)(1)(i), (vii) or (x) for the purpose of providing the
information required by Section 10(a) of the Securities Act shall
be deemed to be part of and included in the registration statement
as of the earlier of the date such form of prospectus is first used
after effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As provided
in Rule 430B, for liability purposes of the issuer and any person
that is at that date an underwriter, such date shall be deemed to
be a new effective date of the registration statement relating to
the securities in the registration statement to which that
prospectus relates, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof. Provided, however, that no statement made in a
registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such effective
date, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the
registration statement or made in any such document immediately
prior to such effective date. |
|
(5) |
That, for the purpose of determining liability of the
registrant under the Securities Act to any purchaser in the initial
distribution of the securities, the undersigned registrant
undertakes that in a primary offering of securities of the
undersigned registrant pursuant to this registration statement,
regardless of the underwriting method used to sell the securities
to the purchaser, if the securities are offered or sold to such
purchaser by means of any of the following communications, the
undersigned registrant will be a seller to the purchaser and will
be considered to offer or sell such securities to such
purchaser: |
|
(i) |
Any preliminary prospectus or prospectus of the undersigned
registrant relating to the offering required to be filed pursuant
to Rule 424; |
|
(ii) |
Any free writing prospectus relating to the offering prepared
by or on behalf of the undersigned registrant or used or referred
to by the undersigned registrant; |
|
(iii) |
The portion of any other free writing prospectus relating to
the offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the
undersigned registrant; and |
|
(iv) |
Any other communication that is an offer in the offering made
by the undersigned registrant to the purchaser. |
|
(6) |
That, for purposes of determining any liability under the
Securities Act, each filing of the registrant’s annual report
pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan’s annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated
by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof. |
|
(7) |
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether |
such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has
duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of
Centennial, State of Colorado, on March 14, 2023.
|
NIOCORP DEVELOPMENTS LTD. |
|
|
|
By: |
/s/ Mark A. Smith |
|
Name: |
Mark A. Smith |
|
Title: |
President and Chief Executive Officer (Principal Executive
Officer) |
|
|
|
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in
the capacities and on the dates indicated.
KNOW ALL PERSONS BY THESE PRESENTS, that each of the directors and
officers of the registrant whose signature appears below
constitutes and appoints Mark A. Smith and Neal Shah, or either of
them, as true and lawful attorneys-in-fact and agents with full
power of substitution and re-substitution, for him and in his name,
place and stead, in any and all capacities to sign this
registration statement and any or all amendments to said
registration statement (including post-effective amendments and
registration statements filed pursuant to Rule 462 and otherwise),
and to file the same, with all exhibits thereto, and other
documents in connection therewith, the Securities and Exchange
Commission granting unto said attorney-in-fact and agents the full
power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the foregoing, as
to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and
agents or any of them, or his substitute, may lawfully do or cause
to be done by virtue hereof.
|
President, Chief Executive Officer (Principal |
|
/s/ Mark A. Smith
|
Executive Officer and Authorized U.S. Representative) |
March 14, 2023 |
Mark A.
Smith |
and
Chairman of the Board of Directors |
|
|
|
|
/s/ Neal Shah
|
Chief Financial Officer (Principal Financial and |
March 14, 2023 |
Neal
Shah |
Accounting Officer) |
|
|
|
|
/s/ Michael J. Morris
|
Director |
March 14, 2023 |
Michael J.
Morris |
|
|
|
|
|
/s/ David C. Beling
|
Director |
March 14, 2023 |
David C.
Beling |
|
|
|
|
|
/s/ Anna Castner Wightman
|
Director |
March 14, 2023 |
Anna Castner
Wightman |
|
|
|
|
|
/s/ Nilsa Guerrero-Mahon
|
Director |
March 14, 2023 |
Nilsa
Guerrero-Mahon |
|
|
|
|
|
/s/ Fernanda Fenga
|
Director |
March 14, 2023 |
Fernanda
Fenga |
|
|
|
|
|
/s/ Peter Oliver
|
Director |
March 14, 2023 |
Peter
Oliver |
|
|
Niocorp Developments (QX) (USOTC:NIOBF)
Historical Stock Chart
From Apr 2023 to May 2023
Niocorp Developments (QX) (USOTC:NIOBF)
Historical Stock Chart
From May 2022 to May 2023