What changed in this filing

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Item 1. Financial Statements

2022-11-14 compared with 2022-08-12 · 138 added, 94 removed, 315 unchanged (42% of the section changed)

2 unchanged sentences

Condensed Interim Consolidated Balance Sheets (Unaudited)

(In thousands of U.S.

(Expressed in thousands of U.S.

September 30,

Current assets:

1 unchanged sentence

Accounts receivable

Prepaid expenses, deposits and other

Prepaid expenses and deposits

Non-current assets:

23 unchanged sentences

700,000,000 shares authorized;

92.9 million shares issued and outstanding as of June 30, 2022 (December 31, 2021 - 63.9 million)

92.9 million shares issued and outstanding as of September 30, 2022 (December 31, 2021 - 63.9 million)

Additional paid-in capital

6 unchanged sentences

Condensed Interim Consolidated and Combined Carve-out Statements of Loss and Comprehensive Loss (Unaudited)

(In thousands of U.S.

(Expressed in thousands of U.S.

dollars, except for share and per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

Nine Months Ended

September 30,

Cost of sales

8 unchanged sentences

Foreign exchange loss (gain)

Loss on revaluation of investments

Loss (gain) on revaluation of investments

Loss on revaluation of convertible debt

Share of loss of equity method investees

Other expenses, net

Other expenses (income), net

Loss before income taxes

14 unchanged sentences

Condensed Interim Consolidated and Combined Carve-out Statements of Changes in Equity (Unaudited)

(In thousands of U.S.

(Expressed in thousands of U.S.

dollars, except share amounts)

Six months ended June 30, 2022 and 2021

Nine months ended September 30, 2022 and 2021

comprehensive

Non-controlling

Income (loss)

Balance at January 1, 2021

9 unchanged sentences

Balance at June 30, 2021

Other comprehensive loss

Issuance of common stock, net of issuance costs

Share based compensation

Other changes in non-controlling interests

Balance at September 30, 2021

Balance at January 1, 2022

2 unchanged sentences

Balance at March 31, 2022

Other comprehensive income (loss)

Other comprehensive loss

Issuance of common stock, net of issuance costs

4 unchanged sentences

Balance at June 30, 2022

Other comprehensive income

Share issuance costs

Share-based compensation

Other changes in non-controlling interests

Balance at September 30, 2022

IVANHOE ELECTRIC INC.

Condensed Interim Consolidated and Combined Carve-out Statements of Cash Flows (Unaudited)

(In thousands of U.S.

Six months ended June 30,

(Expressed in thousands of U.S.

Nine months ended September 30, 2022 and 2021

Operating activities

4 unchanged sentences

Share-based compensation

Unrealized foreign exchange (gain) loss

Unrealized foreign exchange loss (gain)

Interest expense

Loss on revaluation of convertible debt

Loss on de-recognition of mineral interest

Loss on revaluation of investments

13 unchanged sentences

Net proceeds from issuance of common stock

Proceeds from convertible notes

Proceeds from Ivanhoe Electric convertible notes

Proceeds from VRB convertible bond, net of issuance costs

Net transfer from parent

13 unchanged sentences

IVANHOE ELECTRIC INC.

Notes to the Condensed Consolidated and Combined Carve-Out Financial Statements

(Unaudited - Tabular amounts in thousands of U.S.

Notes to the Condensed Interim Consolidated and Combined Carve-Out Financial Statements

(Unaudited - Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

7 unchanged sentences

HPX then distributed 59,909,344 shares of common stock of Ivanhoe Electric to HPX stockholders by way of an in-kind dividend, with each HPX stockholder receiving one share of common stock of Ivanhoe Electric for each HPX share held by the stockholder.

As HPX continued to hold its interest in Ivanhoe Electric immediately following the transfer of the Contributed Assets, there was no resultant change of control in either Ivanhoe Electric or the Contributed Assets.

As such, the acquisition by Ivanhoe Electric of the Contributed Assets has been accounted for at historical cost as a transaction between entities under common control.

On June 30, 2022, Ivanhoe Electric completed an initial public offering (“IPO”) of 14,388,000 shares of the Company’s common stock at a price of $ 11.75 per share, resulting in gross proceeds from the offering of $ 169.1 million.

The Company’s shares were listed on the NYSE American and the Toronto Stock Exchange under the ticker symbol “IE”.

Ivanhoe Electric is a mineral project exploration and development company with a focus on identifying and developing mineral projects, and ultimately mines, associated with the metals necessary for electrification, in particular, copper, gold, silver, nickel, cobalt, vanadium and the platinum group metals.

While the Company’s current mineral projects are predominantly in the United States, it also holds significant ownership interests, and in some cases controlling financial interests, in other non-U.S.

mineral projects, in proprietary mineral exploration technology and in minerals-based high technology.

Ivanhoe Electric is a mineral project exploration and development company with a focus on identifying and developing mineral projects, and ultimately mines, associated with the metals necessary for electrification, in particular, copper, nickel, cobalt, vanadium, gold, silver, and the platinum group metals.

The Company’s current mineral projects are located predominantly in the United States.

In addition to mineral projects in the United States, the Company also holds direct and indirect ownership interests, and in some cases controlling financial interests, in other non-U.S.

mineral projects, and in proprietary mineral exploration and minerals-based technologies.

The Company conducts the following business activities through certain subsidiaries:

● Kaizen Discovery Inc.

(“Kaizen”) holds the Pinaya copper-gold exploration project in Peru.

Ivanhoe Electric had an ownership interest in Kaizen of 82.7 % as at June 30, 2022 (December 31, 2021 — 82.7 % ).

● Cordoba Minerals Corp.

(“Cordoba”) holds the San Matias copper-gold-silver project in northern Colombia.

Ivanhoe Electric had an ownership interest in Cordoba of 63.3 % as at June 30, 2022 (December 31, 2021 — 63.3 % ).

● VRB Energy Inc.

(“VRB”), develops, manufactures and installs vanadium flow batteries for grid-scale energy storage.

Ivanhoe Electric had an ownership interest in VRB of 90.0 % as at June 30, 2022 (December 31, 2021 — 90.0 % ).

Ivanhoe Electric had an ownership interest in VRB of 90.0 % as at September 30, 2022 (December 31, 2021 — 90.0 % ).

● Computational Geosciences Inc.

(“CGI”), provides data analytics, geophysical modelling, software licensing and artificial intelligence services for the mineral, oil & gas and water exploration industries.

Ivanhoe Electric had an ownership interest in CGI of 94.3 % as at June 30, 2022 (December 31, 2021 — 94.3 % ).

As such, the acquisition by Ivanhoe Electric of the Contributed Assets has been accounted for at historical cost as a transaction between entities under common control.

Basis of preparation — Prior to the restructuring:

(“CGI”), provides data analytics, geophysical modeling, software licensing and artificial intelligence services for the mineral, oil & gas and water exploration industries.

Ivanhoe Electric had an ownership interest in CGI of 94.3 % as at September 30, 2022 (December 31, 2021 — 94.3 % ).

● Cordoba Minerals Corp.

(“Cordoba”) holds the San Matias copper-gold-silver project in northern Colombia.

Ivanhoe Electric had an ownership interest in Cordoba of 63.3 % as at September 30, 2022 (December 31, 2021 — 63.3 % ).

● Kaizen Discovery Inc.

(“Kaizen”) holds the Pinaya copper-gold exploration project in Peru.

Ivanhoe Electric had an ownership interest in Kaizen of 82.7 % as at September 30, 2022 (December 31, 2021 — 82.7 % ).

Basis of preparation:

These condensed interim consolidated and combined carve-out financial statements have been prepared under U.S.

Generally Accepted Accounting Principles (“U.S.

Basis of preparation — Prior to the restructuring:

These condensed interim consolidated and combined carve-out financial statements include results of the Company for periods prior to the restructuring on April 30, 2021.

2 unchanged sentences

IVANHOE ELECTRIC INC.

Notes to the Condensed Consolidated and Combined Carve-Out Financial Statements

(Unaudited - Tabular amounts in thousands of U.S.

Notes to the Condensed Interim Consolidated and Combined Carve-Out Financial Statements

(Unaudited - Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

15 unchanged sentences

Significant accounting policies:

The accompanying condensed interim consolidated and combined carve-out financial statements are unaudited, but include all adjustments, consisting of normal recurring entries, which management believes to be necessary for a fair presentation for the dates and periods presented.

The accompanying condensed interim consolidated and combined carve-out financial statements are unaudited and include all adjustments, consisting of normal recurring entries, which management believes to be necessary for a fair presentation for the dates and periods presented.

Interim results are not necessarily indicative of results for a full year.

5 unchanged sentences

There have been no material changes to, or in the application of, the accounting policies previously identified and described in the Company’s consolidated and combined carve-out financial statements for the year ended December 31, 2021.

The Company adopted ASU 2019-12 effective January 1, 2022.

The new guidance which simplifies the accounting for income taxes, eliminates certain exceptions with ASC 740 and clarifies certain aspects of the current guidance to promote consistency

IVANHOE ELECTRIC INC.

Notes to the Condensed Consolidated and Combined Carve-Out Financial Statements

(Unaudited - Tabular amounts in thousands of U.S.

Notes to the Condensed Interim Consolidated and Combined Carve-Out Financial Statements

(Unaudited - Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

among reporting entities.

The Company adopted ASU 2019-12 effective January 1, 2022.

The new guidance which simplifies the accounting for income taxes, eliminates certain exceptions with ASC 740 and clarifies certain aspects of the current guidance to promote consistency among reporting entities.

The adoption of ASU 2019-12 did not have a material impact on the Company’s condensed interim consolidated and combined carve-out financial statements.

10 unchanged sentences

Cash and cash equivalents:

Of the total cash and cash equivalents at June 30, 2022 and December 31, 2021, $ 21.5 million and $ 28.5 million, respectively, was not available for the general corporate purposes of the Company as it was held by non-wholly-owned subsidiaries.

Of the total cash and cash equivalents at September 30, 2022 and December 31, 2021, $ 16.7 million and $ 28.5 million, respectively, was not available for the general corporate purposes of the Company as it was held by non-wholly-owned subsidiaries.

Investments subject to significant influence:

The Company’s principal investment subject to significant influence is Sama Resources Inc.

Others include the Company’s investments in Fjordland Exploration Inc.

Others include its investments in Fjordland Exploration Inc.

(“Fjordland”) and Sama Nickel Corporation (“SNC”).

1 unchanged sentence

Equity method

Balance at January 1, 2022

Balance at December 31, 2021

Change in fair value

Investment during the period

Share of loss

Foreign currency translation

Balance at June 30, 2022

Balance at September 30, 2022

IVANHOE ELECTRIC INC.

Notes to the Condensed Interim Consolidated and Combined Carve-Out Financial Statements

(Unaudited - Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

Exploration mineral interests:

Tintic Project

Pinaya Project

Mineral Royalty

Balance at December 31, 2021

Acquisition costs

De-recognition (Note a)

Foreign currency translation

Balance at June 30, 2022

IVANHOE ELECTRIC INC.

Notes to the Condensed Consolidated and Combined Carve-Out Financial Statements

(Unaudited - Tabular amounts in thousands of U.S.

dollars, unless otherwise indicated)

Balance at September 30, 2022

Terminated land purchase:

On November 24, 2021, the Company entered into an agreement to acquire additional land adjacent to the Santa Cruz project and the associated mineral rights.

In June 2022, the Company entered into an agreement to extend the closing date of the original agreement to September 20, 2022.

The Company elected not to proceed with the transaction and terminated the purchase and sale agreement.

Prior to termination of the agreement the Company had capitalized $ 5.7 million in non-refundable payments.

These payments have been de-recognized and recorded as exploration expenses in the condensed interim consolidated and combined carve-out statement of loss (Note 11).

Deferred consideration payable:

6 unchanged sentences

Balance at December 31, 2020

Issuance of Series 2 Convertible Notes

Debt issuance

Interest expense

Fair value adjustments

Change in fair value

Balance at September 30, 2021

Balance at December 31, 2021

Debt issuance

Interest expense

Change in fair value

Conversion to common stock

Balance at June 30, 2022

Balance at September 30, 2022

(a) Ivanhoe Electric convertible notes:

2 unchanged sentences

Upon completion of the Company’s IPO on June 30, 2022, the Series 1 Convertible Notes, including accrued interest of $ 0.9 million, were automatically converted into 5,419,923 shares of common stock of the Company at a conversion price of $ 9.39 per share (Note 9).

IVANHOE ELECTRIC INC.

Notes to the Condensed Interim Consolidated and Combined Carve-Out Financial Statements

(Unaudited - Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

(ii) Series 2 Convertible Notes:

4 unchanged sentences

The Company elected to measure the convertible notes at fair value, with subsequent changes in fair value recorded in net loss.

(b) VRB Convertible bond:

VRB Convertible bond:

On July 8, 2021, VRB issued a convertible bond for gross proceeds of $ 24.0 million.

1 unchanged sentence

The Company has accounted for the convertible bond as a debt instrument accounted at amortized cost.

IVANHOE ELECTRIC INC.

Notes to the Condensed Consolidated and Combined Carve-Out Financial Statements

(Unaudited - Tabular amounts in thousands of U.S.

dollars, unless otherwise indicated)

The book value of the VRB convertible debt approximates fair value as VRB’s operations are early stage and there have been no significant changes to the business since the issuance date.

The fair value determination is a level 3 assessment.

Common stock transactions

1 unchanged sentence

Directly attributable issuance costs of $ 11.1 million incurred in conjunction with the IPO were recorded as a reduction in paid in capital.

(b) Debt conversions:

On June 30, 2022, $ 50.9 million of Series 1 Convertible Notes including accrued interest were automatically converted into 5,419,923 shares of common stock of the Company at a conversion price of $ 9.39 per share.

Debt conversions:

On June 30, 2022, $ 86.8 million of Series 2 Convertible Notes including accrued interest were automatically converted to 8,209,035 shares of common stock of the Company at a conversion price of $ 10.58 per share.

The stock issuance resulting from the Series 1 and Series 2 debt conversions was recorded at fair value based on the IPO price of $ 11.75 per share.

Stock issuance to CAR:

On June 30, 2022, the Company issued 945,626 shares of common stock to CAR (Note 7).

The stock issuance was recorded at fair value based on the IPO price of $ 11.75 per share.

IVANHOE ELECTRIC INC.

Notes to the Condensed Interim Consolidated and Combined Carve-Out Financial Statements

(Unaudited - Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

The Company recognized revenue from the following sources:

Three months ended

Six months ended

Nine months ended

September 30:

Software licensing (Note a)

5 unchanged sentences

This revenue is included in the data processing segment.

(b) At June 30, 2022, the Company had a contract liability of $ 3.3 million (December 31, 2021 — $ 3.5 million) relating to the sale of renewable energy storage systems.

IVANHOE ELECTRIC INC.

Notes to the Condensed Consolidated and Combined Carve-Out Financial Statements

(Unaudited - Tabular amounts in thousands of U.S.

dollars, unless otherwise indicated)

Exploration expense:

(b) At September 30, 2022, the Company had a contract liability of $2.8 million (December 31, 2021 — $ 3.5 million) relating to the sale of renewable energy storage systems.

Exploration expenses:

Three months ended

Six months ended

Santa Cruz, USA

Nine months ended

September 30:

Santa Cruz, USA (Note a)

San Matias, Colombia

Perseverance, USA

Hog Heaven, USA

Yangayu, Papua New Guinea

Hog Heaven, USA

Carolina, USA

2 unchanged sentences

Project generation and other

Exploration expense at the Santa Cruz Project for the three and nine months ended September 30, 2022 includes $ 5.7 million recorded upon the de-recognition of certain non-refundable payments made under a terminated land purchase agreement at the Santa Cruz Project (Note 6(a)).

Related party transactions:

2 unchanged sentences

The nature of the Company’s related party relationship with the Parent is disclosed in Note 1.

IVANHOE ELECTRIC INC.

Notes to the Condensed Interim Consolidated and Combined Carve-Out Financial Statements

(Unaudited - Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

Cost allocations

5 unchanged sentences

The allocated costs are primarily included in general and administrative expenses and exploration expenses in the consolidated and combined statements of loss.

IVANHOE ELECTRIC INC.

Notes to the Condensed Consolidated and Combined Carve-Out Financial Statements

(Unaudited - Tabular amounts in thousands of U.S.

dollars, unless otherwise indicated)

Other related parties

3 unchanged sentences

three months ended

six months ended

nine months ended

Balance outstanding as at

September 30,

Total Expenses

1 unchanged sentence

Ivanhoe Capital Aviation (Note b)

I-Pulse (Note c)

Global Mining (Note a)

Transactions for the

Transactions for the six

Transactions for the nine

three months ended

September 30,

Expense classification

3 unchanged sentences

(“Global Mining”) is a private company based in Vancouver, Canada, that provides administration, accounting, and other office services to the Parent and the Company on a cost-recovery basis.

The Company held 7.1 % of Global Mining’s outstanding common shares at June 30, 2022 (December 31, 2021 — 7.1 % ).

The Company held 7.1 % of Global Mining’s outstanding common shares at September 30, 2022 (December 31, 2021 — 7.1 % ).

Transactions incurred with Global Mining include cost allocations from the Parent totaling $ 645,000 from the period January 1, 2021 to April 30, 2021.

1 unchanged sentence

ICA provides use of its aircraft to the Company.

After the restructuring there was reimbursement to HPX for certain costs paid by HPX on the Company’s behalf.

(“I-Pulse”) is a significant shareholder of the Company.

The Company has reimbursed I-Pulse certain consulting expenses paid by I-Pulse on the Company’s behalf.

IVANHOE ELECTRIC INC.

Notes to the Condensed Consolidated and Combined Carve-Out Financial Statements

(Unaudited - Tabular amounts in thousands of U.S.

Notes to the Condensed Interim Consolidated and Combined Carve-Out Financial Statements

(Unaudited - Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

(d) HPX was the parent of the Company prior to the restructuring on April 30, 2021 (Note 1).

Post restructuring there was reimbursement to HPX for certain costs paid by HPX on the Company’s behalf.

Fair value measurement:

The following table provides the valuation hierarchy classification of assets and liabilities that are recorded at fair value and measured on a recurring basis in the combined balance sheets:

June 30, 2022

September 30, 2022

December 31, 2021

17 unchanged sentences

IVANHOE ELECTRIC INC.

Notes to the Condensed Consolidated and Combined Carve-Out Financial Statements

(Unaudited - Tabular amounts in thousands of U.S.

Notes to the Condensed Interim Consolidated and Combined Carve-Out Financial Statements

(Unaudited - Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

Segment information for the periods presented is as follows:

Three months ended June 30, 2022

Six months ended June 30, 2022

Three months ended September 30, 2022

Nine months ended September 30, 2022

Intersegment revenues

1 unchanged sentence

Segment Assets

Three months ended June 30, 2021

Six months ended June 30, 2021

Three months ended September 30, 2021

Nine months ended September 30, 2021

Intersegment revenues

4 unchanged sentences

Although the results of litigation and claims are inherently unpredictable and uncertain, the Company is not currently a party to any legal proceedings the outcome of which, if determined adversely to it, are believed to, either individually or taken together, have a material adverse effect on the Company’s business, financial condition or results of operations.

Subsequent events:

On October 24, 2022 the Company entered into an agreement with I-Pulse, a related party of the company, to purchase six Typhoon™ transmitters to be delivered in stages over the course of the next thirty-nine months.

The Company uses Typhoon™ to conduct geophysical electrical surveys on exploration targets.

The total purchase price for the six Typhoon™ transmitters is $ 12.4 million ( 12.6 million Euros).

The agreement also includes annual maintenance costs of $ 1.7 million ( 1.7 million Euros) per year.

In October 2022, the Company made upfront payments totaling $ 7.1 million ( 7.1 million Euros).

The remaining payments will be made as each Typhoon™ transmitter system is delivered.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements