What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-08-12 · 94 added, 100 removed, 194 unchanged (50% of the section changed)

4 unchanged sentences

Those statements include, but are not limited to, statements with respect to:

estimated calculations of mineral reserves and resources at our properties, plans and objectives, industry trends, our requirements for additional capital, treatment under applicable government regimes for permitting or attaining approvals, government regulation, environmental risks, title disputes or claims, synergies of potential future acquisitions, and our anticipated uses of the net proceeds from our initial public offering.

estimated calculations of mineral reserves and resources at our properties including changes in those estimated calculations, anticipated results of exploration activities, plans and objectives, industry trends, our requirements for additional capital, treatment under applicable government regimes for permitting or attaining approvals, government regulation, environmental risks, title disputes or claims, synergies of potential future acquisitions, and our anticipated uses of the net proceeds from our initial public offering.

In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “could,” “should,” “would,” “achieve,” “budget,” “scheduled,” “forecasts,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” the negative of these terms and other comparable terminology.

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our mineral resource calculations at the Santa Cruz Project are only estimates;

the Santa Cruz 3D induced polarization and resistivity geophysical survey results are expected by September 2022;

the first results of the IP survey at the Pinaya Project are expected in September 2022;

actual capital costs, operating costs, production and economic returns may differ significantly from those we have anticipated;

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we have claims and legal proceedings against two of our subsidiaries;

our business is subject to significant risk and hazards associated with mining operations;

our failure to identify attractive acquisition candidates or joint ventures with strategic partners or our inability to successfully integrate acquired mineral properties or successfully manage joint ventures impacts our business;

our business is subject to significant risk and hazards associated with future mining operations;

we may fail to identify attractive acquisition candidates or joint ventures with strategic partners or be unable to successfully integrate acquired mineral properties or successfully manage joint ventures;

our business is extensively regulated by the United States and foreign governments as well as local governments;

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We believe the United States is significantly underexplored and will yield major new discoveries of these metals.

Our mineral projects focus on copper, gold, silver, nickel, cobalt, vanadium and the platinum group metals.

in publicly listed companies in Canada, through our ownership of the equity of those companies, that have an interest in such mineral projects.

Our mineral projects focus on copper, nickel, cobalt, vanadium, gold, silver, and the platinum group metals.

“Our” mineral projects refers to our interests in such projects which may be a direct ownership interest in mineral titles (including through subsidiary entities), a right to acquire mineral titles through an earn-in or option agreement, or, in the case of our investments in publicly listed companies in Canada, through our ownership of the equity of those companies, that have an interest in such mineral projects.

Our two main mineral projects are located in the United States and are known as the Santa Cruz Copper Project (“Santa Cruz” or the “Santa Cruz Project”) in Arizona and the Tintic Copper-Gold Project (“Tintic” or the “Tintic Project”) in Utah.

We have the option to acquire 100% of the mineral rights constituting the Santa Cruz and Tintic projects, although we currently own an 84.3% ownership interest in the mineral rights to the Tintic Project by acreage with the right to acquire the balance of the mineral rights.

Our other key mineral projects are the Hog Heaven Project, located in Montana (the “Hog Heaven Project”), and the Ivory Coast Project, which is owned directly by a subsidiary of Sama Resources Inc.

(“Sama”), although we have a direct interest in Sama’s subsidiary as well.

We also have investments in publicly traded companies in Canada, and through our ownership of equity in those companies, we have an indirect interest in mineral projects in United States, Canada, Colombia, Ivory Coast and Peru.

We have the option to acquire 100% of the mineral rights constituting the Santa Cruz Project, and we currently own an 84.3% ownership interest in the mineral rights to the Tintic Project by acreage with the balance of the mineral rights controlled by leases.

Our other key mineral projects are the Hog Heaven Project, located in Montana (the “Hog Heaven Project”), and the Ivory Coast Project, which is held through our 23% equity interest in Sama Resources Inc.

(“Sama”) and our 30% direct interest in the Sama Nickel Corporation Inc.

joint venture.

We also have investments in publicly traded companies in Canada, and through our ownership of equity in those companies, we have an indirect interest in mineral projects in the United States, Canada, Colombia, Ivory Coast and Peru.

In addition to our mineral projects, we also own controlling interests in two technology companies:

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(“VRB”) and Computational Geosciences Inc.

As of June 30, 2022, we owned 90.0% of the outstanding shares of VRB.

As of September 30, 2022, we owned 90.0% of the outstanding shares of VRB.

VRB and its subsidiary companies are primarily engaged in the design, manufacture, installation, and operation of energy storage systems.

As of June 30, 2022, we owned 94.3% of CGI’s outstanding shares.

As of September 30, 2022, we owned 94.3% of CGI’s outstanding shares.

CGI has developed technology that consists of sophisticated codes to process geophysical data and build 3D subsurface images that could indicate the presence of various natural resources, including metallic minerals and water.

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Through our earn-in and option agreements, we have the right (and in some cases, the obligation) to fund and conduct exploration on the underlying mineral project prior to determining whether to acquire a minority or majority ownership interest through further funding the costs of such exploration and, in some cases, through direct payments to the owners of the project.

In the event we cease expenditure on an exploration mineral project or fail to incur the agreed level of exploration expenditures, we will not obtain an ownership right beyond any which may have been acquired as of the date of termination.

In the event we cease making expenditures on an exploration mineral project or fail to incur the agreed level of exploration expenditures, we will not obtain an ownership right beyond any which may have been acquired as of the date of termination.

General and Administrative Expenses

Our general and administrative expenses consist of salaries and benefits, stock compensation, professional and consultant fees, insurance and other general administration costs.

Our general and administrative expenses are expected to increase significantly now that we have commenced operating as a public company.

Our general and administrative expenses have increased significantly now that we are operating as a public company and have commenced strengthening our management team.

We expect higher costs related to salaries, benefits, stock compensation, legal fees, compliance and corporate governance, accounting and audit expenses, stock exchange listing fees, transfer agent and other shareholder-related fees, directors’ and officers’ and other insurance costs and other administrative costs.

Research and Development Expenses

Each expenditure on research and development activities is recognized as an expense in the period in which it is incurred.

Expenditures on research and development activities are recognized as an expense in the period in which they are incurred.

Since 2018, the majority of our research and development expenses came from CGI’s data processing business, which includes amortization expenses related to its artificial intelligence intellectual property, which it acquired in 2018.

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Results of Operations

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

For the three months ended June 30, 2022, we recorded a net loss attributable to common stockholders of $54.4 million ($0.85 per share), compared to $10.7 million ($0.18 per share) for the three months ended June 30, 2021, which was an increase of $43.6 million.

Significant contributors to this increase in the three months ended June 30, 2022 were a $15.5 million increase in exploration expenditures, a $16.1 million increase in non-cash loss on revaluation of convertible debt and a $4.7 million increase in non-cash loss on revaluation of investments compared to the three months ended June 30, 2021.

Exploration expenses of $23.9 million for the three months ended June 30, 2022 were an increase of $15.5 million from $8.3 million for the three months ended June 30, 2021.

This increase is largely attributed to exploration expenditures at the Santa Cruz Project which had not yet been acquired in the comparable period ending June 30, 2021.

During the three months ended June 30, 2022, expenditures largely focused on exploration activities at:

● the Santa Cruz Project where $14.8 million of exploration expenditure was incurred in the quarter.

Activities at Santa Cruz are focused on a 85,000-meter program of resource in-fill, geotechnical, hydrological and metallurgical drilling.

As of June 30,

2022, seven drills rigs were operating on site to in-fill and expand the Santa Cruz deposit, with 36,637 meters completed by the end of June 2022.

In addition, we recently completed a 26.5-km2 (6,500-acre), 3D induced polarization (“IP”) and resistivity geophysical survey using our proprietary high-power Typhoon™ transmitter system.

The data is currently being processed by CGI and we expect survey results by September 2022;

Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

For the three months ended September 30, 2022, we recorded a net loss attributable to common stockholders of $40.4 million ($0.43 per share), compared to $17.6 million ($0.28 per share) for the three months ended September 30, 2021, which was an increase of $22.7 million primarily due to a $24.0 million increase in exploration expenses.

Exploration expenses of $34.0 million for the three months ended September 30, 2022, increased by $24.0 million from $10.0 million for the three months ended September 30, 2021.

This increase is largely attributable to exploration expenditures at the Santa Cruz Project which was acquired in August 2021.

During the three months ended September 30, 2022, expenditures mainly focused on exploration activities at:

● the Santa Cruz Project where $21.8 million of exploration expenditure was incurred in the quarter as compared to $2.2 million in the third quarter of 2021.

Activities at Santa Cruz were focused on the ongoing large-scale drilling program.

As of September 30, 2022, up to seven drill rigs were in operation and a total of 19,398 meters of drilling had been completed during the quarter.

As of September 30, 2022, a total of 52,720 meters had been drilled which included 23,106 meters of exploration drilling and 29,614 meters of drilling that is being used to collect resource in-fill, geotechnical, hydrological and metallurgical information required to assess potential mine development options.

In addition, in July 2022, we completed a 26.5-km2 (6,500-acre), 3D induced polarization (“IP”) and resistivity geophysical survey using our proprietary high-power Typhoon™ transmitter system.

Included in the $21.8 million of exploration expenditure was a $5.7 million expense related to amounts that had been previously capitalized as part of an agreement to purchase certain land adjacent to the Santa Cruz Project.

In September 2022, we elected to not proceed with the transaction and terminated the agreement and as a result the mineral interest asset was de-recognized;

● the San Matias Project where $6.0 million of expenditure was incurred in the quarter.

Activities at San Matias included commencing a Feasibility Study at the Alacran deposit which will focus on updating the mine plan and mineral resource estimate at the Alacran deposit.

A 25,000-meter initial phase drill program has commenced in support of the Feasibility Study;

● the Pinaya Project where $1.5 million of exploration expenditure was incurred in the quarter and which was focused on an IP resistivity survey at the project which commenced in March 2022 and was completed in June 2022.

First results of the IP survey are expected in September 2022;

General and administrative expenses of $4.7 million for the three months ended June 30, 2022 increased by $1.2 million from $3.4 million in the three months ended June 30, 2021.

Several items contributed to the increase, including:

● a $0.5 million increase in accounting and audit fees largely related to the preparation of financial statements and other requirements for the IPO;

● a $0.4 million increase at VRB primarily due to an increase in professional fees in relation to certain technical studies that it was conducting;

● $0.3 million in expenditures related to entering into an agreement for aviation services with a related company during 2022 (three months ended June 30, 2021:

During the three months ended June 30, 2022, we recorded a non-cash $16.1 million loss on revaluation of convertible debt which related to the conversion of our Series 1 and Series 2 Convertible Notes (the “Notes”) that were automatically converted into shares of common stock upon the completion of the IPO on June 30, 2022.

An aggregate of $50.9 million of Series 1 Notes and $86.8 million of Series 2 Notes, including accrued interest, were automatically converted into 13,628,958 shares of common stock of the Company.

Revenue for the three months ended June 30, 2022 was $0.2 million, a decrease of $1.3 million from $1.5 million for the three months ended June 30, 2021.

Three months ended

ended June 30,

Percentage change

June 30, 2022

year-over-year

Activities at San Matias were focused on continuing the 25,000-meter initial phase drill program in support of the Feasibility Study.

General and administrative expenses of $6.9 million for the three months ended September 30, 2022 decreased by $1.0 million from $7.9 million in the three months ended September 30, 2021.

Several items contributed to the decrease, including:

● the three months ended September 30, 2021 included $1.4 million of financing fees relating to the 2021 Series 1 Convertible Notes and common stock private placement.

There was no similar expense in the three months ended September 30, 2022;

● a $0.9 million decrease in aviation expenditures in the three months ended September 30, 2022 to $0.2 million as compared to $1.1 million in the three months ended September 30, 2021.

● a $0.4 million decrease in administration expenses at Kaizen Discovery largely due to lower legal expenses in the quarter as compared to the three months ended September 30, 2021, which included significant costs related to the AM Gold litigation.

● The above decreases were offset by $1.6 million expense in relation to the new directors and officers’ insurance policy we entered into when we became a public company in June 2022.

There was no similar expense in 2021.

Revenue for the three months ended September 30, 2022 was $1.2 million, an increase of $0.1 million from $1.0 million for the three months ended September 30, 2021.

Although total revenue was relatively consistent with the similar period in 2021, the mix of revenue changed.

Three months ended September 30,

(In thousands)

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Cost of sales

CGI’s software licensing and data processing services to the mining and oil and gas industries represented 100% of our revenue for the three months ended June 30, 2022 ($0.2 million) and 98% for the three months ended June 30, 2021 ($1.5 million).

The significant decrease in CGI’s revenue was a direct result of a new contract that CGI entered into with one of its customers upon the expiration in 2021 of a previous three-year contract.

CGI’s software licensing and data processing services to the mining and oil and gas industries represented 46.9% of our revenue for the three months ended September 30, 2022 ($0.6 million) and 99.8% for the three months ended September 30, 2021 ($1.0 million).

The decrease in CGI’s revenue was a result of a new contract that CGI entered into with one of its customers upon the expiration in 2021 of a previous three-year contract.

Under the new agreement with this customer, CGI agreed to license certain software for a one-time fee of $6.5 million, which was received and recognized in the first quarter of 2022.

As at June 30, 2022, there only remains a final

payment of $250,000 under this agreement due in 2023.

As at September 30, 2022, there only remains a final payment of $250,000 under this agreement due in 2023.

We cannot provide any assurance that we will enter into any additional contracts with this customer in the future.

Research and development expenses for the six months ended June 30, 2022 were $1.3 million, an increase of $0.5 million from the same period in 2021 largely attributable to a $0.3 million increase in research and development activity at CGI as we have been focused on developing its services to generate new business after completing the $6.5 million software licensing agreement.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

For the six months ended June 30, 2022, we recorded a net loss attributable to common stockholders of $69.8 million ($1.09 per share), compared to $15.4 million ($0.26 per share) for the six months ended June 30, 2021, which was an increase of $54.4 million.

Significant contributors to this increase in the six months ended June 30, 2022 were a $26.6 million increase in exploration expenditures, a $19.0 million increase in non-cash loss on revaluation of convertible debt and a $3.7 million increase in general and administrative expenses offset by an increase in revenue of $3.9 million compared to the six months ended June 30, 2021.

Exploration expenses of $41.2 million for the six months ended June 30, 2022 increased by $26.6 million from $14.6 million for the six months ended June 30, 2021.

This increase is largely attributed to exploration expenditures at the Santa Cruz Project which had not yet been acquired in the comparable period ending June 30, 2021.

During the six months ended June 30, 2022, expenditures largely focused on exploration activities at:

● the Santa Cruz Project where $24.6 million of exploration expenditure was incurred in the six months ended June 30, 2022.

Activities at Santa Cruz are focused on a 85,000-meter program of resource in-fill, geotechnical, hydrological and metallurgical drilling, in addition to a property-wide Typhoon™ 3D IP survey;

● the San Matias Project where $5.8 million of exploration expenditure was incurred in the six months ended June 30, 2022, focused on an exploration drilling program than began in November 2021 and was completed in March 2022, as well as commencing a Feasibility Study on the Alacran deposit in May 2022;

● the Pinaya Project where $2.2 million of exploration expenditure was incurred in the six months ended June 30, 2022.

VRB’s energy storage system revenue represented 53.1% of our revenue for the three months ended September 30, 2022 ($0.6 million) and 0.02% for the three months ended September 30, 2021 ($0.0 million).

During the three months ended September 30, 2022, VRB delivered, installed and commissioned a 125kW/500kWh energy storage system to a customer which resulted in $0.3 million of revenue being recognized.

In addition, VRB also recognized $0.3 million in revenue from the sale of vanadium electrolyte.

Research and development expenses for the three months ended September 30, 2022 were $1.1 million, consistent with the $1.0 million incurred in the same period in 2021.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

For the nine months ended September 30, 2022, we recorded a net loss attributable to common stockholders of $110.2 million ($1.50 per share), compared to $33.0 million ($0.54 per share) for the nine months ended September 30, 2021, which was an increase of $77.2 million.

Significant contributors to this increase in the nine months ended September 30, 2022 were a $50.6 million increase in exploration expenditures, a $18.8 million increase in non-cash loss on revaluation of convertible debt and a $2.6 million increase in general and administrative expenses, offset by an increase in revenue of $4.1 million compared to the nine months ended September 30, 2021.

Exploration expenses of $75.2 million for the nine months ended September 30, 2022, increased by $50.6 million from $24.6 million for the nine months ended September 30, 2021.

This increase is largely attributed to exploration expenditures at the Santa Cruz Project.

During the nine months ended September 30, 2022, expenditures largely focused on exploration activities at:

● the Santa Cruz Project where $46.4 million of exploration expenditure was incurred in the nine months ended September 30, 2022 compared to $2.6 million incurred in the nine months ended September 30, 2021.

Activities during the nine months ended September 30, 2022 at Santa Cruz were focused on a program of resource in-fill, geotechnical, hydrological and metallurgical drilling, in addition to a 26.5 km2 (6,500 acre) Typhoon™ 3D IP survey that was completed in July 2022.

Included in the $46.4 million of exploration expenditure was a $5.7 million expense related to amounts that had been previously capitalized as part of an agreement to purchase certain land adjacent to the Santa Cruz Project.

In September 2022, the agreement was terminated by the Company.

● the San Matias Project where $11.8 million of exploration expenditure was incurred in the nine months ended September 30, 2022, focused on the commencing of a Feasibility Study on the Alacran deposit in May 2022 which included starting the 25,000-metre initial phase drill program;

● the Pinaya Project where $2.4 million of exploration expenditure was incurred in the nine months ended September 30, 2022.

Activities included a 3,046-meter drill program that began in November 2021 and that was completed in January 2022 as well as expenditures related to the IP survey which began in March 2022 and that was completed on June 30, 2022.

General and administrative expenses of $9.9 million for the six months ended June 30, 2022 increased by $3.7 million from $6.2 million in the six months ended June 30, 2021.

General and administrative expenses of $16.7 million for the nine months ended September 30, 2022 increased by $2.6 million from $14.1 million in the nine months ended September 30, 2021.

Several items contributed to the increase, including:

● a $1.3 million increase in accounting and audit fees largely related to the preparation of financial statements and other requirements for the IPO;

● a $1.1 million increase at VRB primarily due to an increase in professional fees in relation to certain technical studies that it was conducting;

● a $0.4 million increase at Kaizen primarily due to higher share based payments as a result of an option grant in February 2022 and higher professional fees related to the legal proceedings with AM Gold Inc.;

● $0.5 million in expenditures related to entering into an agreement for aviation services with a related company during 2022 (six months ended June 2021:

During the six months ended June 30, 2022, we recorded a non-cash $19.0 million loss on revaluation of convertible debt which related to the conversion of the Notes that were automatically converted into shares of common stock upon the completion of the IPO on June 30, 2022.

Revenue for the six months ended June 30, 2022 was $7.0 million, an increase of $3.9 million from $3.1 million for the six months ended June 30, 2021.

Six months ended

Percentage change

June 30, 2022

June 30, 2021

year-over-year

● a $1.1 million increase in accounting and audit fees largely related to the requirements of our filings and IPO;

● a $1.7 million increase in directors and officers insurance expenses during the nine months ended September 30, 2022 in relation to the new directors and officers’ insurance policy we entered into when we became a public company in June 2022.

There was no similar expense in prior years;

● a $0.7 million increase in administration expenses at VRB primarily due to an increase in professional fees in relation to certain technical studies that it was conducting;

● The above increases were offset by $1.4 million of financing fees relating to 2021 Series 1 Convertible Notes and common stock private placement in the nine month period ended September 30, 2021.

There was no similar expense in the nine months ended September 30, 2022.

During the nine months ended September 30, 2022, we recorded a non-cash $19.0 million loss on revaluation of convertible debt which related to the conversion of the Notes that were automatically converted into shares of common stock upon the completion of the IPO on June 30, 2022.

Revenue for the nine months ended September 30, 2022 was $8.2 million, an increase of $4.1 million from $4.1 million for the nine months ended September 30, 2021.

Nine months ended September 30,

(In thousands)

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Cost of sales

CGI’s software licensing and data processing services to the mining and oil and gas industries represented 100% of our revenue for the six months ended June 30, 2022 ($7.0 million) and 97% for the six months ended June 30, 2021 ($3.0 million).

This significant increase in CGI’s revenue was a direct result of a new contract that CGI entered into with one of its customers upon the expiration in 2021 of a previous three-year contract.

CGI’s software licensing and data processing services to the mining and oil and gas industries represented 92.3% of our revenue for the nine months ended September 30, 2022 ($7.5 million) and 97.4% for the nine months ended September 30, 2021 ($4.0 million).

The increase in CGI’s revenue was a result of a new contract that CGI entered into with one of its customers upon the expiration in 2021 of a previous three-year contract.

Under the new agreement with this customer, CGI agreed to license certain software for a one-time fee of $6.5 million, which was received and recognized in the first quarter of 2022.

As at June 30, 2022, there only remains a final payment of $250,000 under this agreement due in 2023.

As at September 30, 2022, there only remains a final payment of $250,000 under this agreement due in 2023.

We cannot provide any assurance that we will enter into any additional contracts with this customer in the future.

CGI’s gross profit for the six months ended June 30, 2022 was $6.8 million, a $4.4 million or a 186% increase from $2.4 million for the six months ended June 30, 2021.

The licensing of certain software for a one-time fee of $6.5 million had a direct impact on gross profit as the licenses had no underlying carrying value and therefore resulted in a $6.5 million gross profit being recognized in relation to the license.

Research and development expenses for the six months ended June 30, 2022 were $2.6 million, an increase of $0.9 million from the same period in 2021 attributable to a $0.6 million increase in research and development activity at CGI and a $0.3 million increase at VRB.

VRB’s energy storage system revenue represented 7.7% of our revenue for the nine months ended September 30, 2022 ($0.6 million) and 2.6% for the nine months ended September 30, 2021 ($0.1 million).

During the nine months ended September 30, 2022, VRB delivered, installed and commissioned a 125kW/500kWh energy storage system to a customer which resulted in $0.3 million of revenue being recognized.

In addition, VRB also recognized $0.3 million in revenue from the sale of electrolyte.

Research and development expenses for the nine months ended September 30, 2022 were $3.7 million, an increase of $1.0 million from the same period in 2021 attributable to a $0.6 million increase in research and development activity at CGI and a $0.4 million increase at VRB.

Research and development activities increased in 2022 at CGI as CGI has been focused on developing its services to generate new business after completing the $6.5 million software licensing agreement.

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We have recurring net losses and negative operating cash flows and we expect that we will continue to operate at a loss for the foreseeable future.

We generate revenue from our technology businesses.

We generate revenue only from our technology businesses.

We have not generated any revenue from our mining projects and do not expect to generate any revenue from our mining projects for the foreseeable future.

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The gross proceeds from the offering were approximately $169.1 million, before deducting underwriting discounts and commissions and estimated offering expenses payable by us.

At June 30, 2022, and December 31, 2021, we had cash and cash equivalents of $223.8 million and $49.9 million, respectively, and a working capital balance of $215.2 million and $17.7 million, respectively.

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 these amounts were held by non-wholly-owned subsidiaries.

At September 30, 2022, and December 31, 2021, we had cash and cash equivalents of $177.7 million and $49.9 million, respectively, and a working capital balance of $172.1 million and $17.7 million, respectively.

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 these amounts were held by non-wholly-owned subsidiaries.

We believe that we will have sufficient cash resources to carry out our business plans, including our currently planned exploration activities at our mineral projects, for at least the next 12 months.

We have based these estimates on our current assumptions which may require future adjustments based on our ongoing business decisions as well as, in particular, exploration success at our mineral projects.

Accordingly, we may require additional cash resources earlier than we currently expect.

Accordingly, we may require additional cash resources earlier than we currently expect or we may need to curtail currently planned exploration activities.

Our significant operational expenses include the payments that we anticipate making under the various earn-in and option agreements to which we are a party.

These agreements are structured to provide us with flexibility whereby our ability to continue to explore on a mineral project is contingent on funding agreed specified levels over specified time intervals.

A summary of our mineral obligations and payments as at June 30, 2022 are as follows:

Mineral Project Obligation and Payments as at June 30, 2022 (in $ thousands)

A summary of our mineral obligations and payments as at September 30, 2022 are as follows:

Mineral Project Obligation and Payments as at September 30, 2022 (in $ thousands)

Mineral Project

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Discretionary

Cash Balances as of June 30, 2022

The table below discloses the amounts of cash disaggregated by currency denomination as of June 30, 2022 in each jurisdiction that our affiliated entities are domiciled.

Cash Balances as of September 30, 2022

The table below discloses the amounts of cash disaggregated by currency denomination as of September 30, 2022 in each jurisdiction that our affiliated entities are domiciled.

Currency by Denomination (in USD Equivalents)

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Since their incorporation, these PRC subsidiaries have had accumulated losses and have not declared or paid any dividends or made any distribution of earnings.

There were no cash transfers to or from our PRC subsidiaries in the form of intercompany loans during the three and six month periods ended June 30, 2022 and 2021.

There were no cash transfers to or from our PRC subsidiaries in the form of intercompany loans during the three and nine month periods ended September 30, 2022 and 2021.

Refer to Note 22 of our audited consolidated and combined carve out financial statements for the year ended December 31, 2021 included in the Final Prospectus, which outlines other restrictions on transfers of net assets from our consolidated subsidiaries to the Company.

The following table presents our sources and uses of cash for the periods indicated:

Six months ended June 30,

Nine months ended September 30,

(In thousands)

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Operating activities.

Net cash used in operating activities for the six months ended June 30, 2022 was $44.2 million, an increase of $27.3 million from the $16.9 million of net cash used for the six months ended June 30, 2021.

Net cash used in operating activities for the nine months ended September 30, 2022 was $78.8 million, an increase of $49.3 million from the $29.5 million of net cash used for the nine months ended September 30, 2021.

Net cash used in operating activities for all periods presented was largely spent on our exploration expenses and our general and administrative costs.

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To date, because our mining projects are in the exploration stage, we have not incurred material capital expenditures.

Net cash used in investing activities for the six months ended June 30, 2022 of $28.4 million was mainly attributable to $25.7 million for payments for mineral interests of which $21.4 million were for the Santa Cruz Project and $4.0 million were for the Tintic Project.

Net cash used in investing activities for the nine months ended September 30, 2022 of $38.3 million was mainly attributable to $33.9 million for payments for mineral interests of which $28.8 million were for the Santa Cruz Project and $5.8 million were for the Tintic Project.

Financing activities.

During the six months ended June 30, 2022, there was $246.8 million of net cash provided by financing activities representing the $160.6 million of net cash raised upon the closing of our IPO on June 30, 2022, and $86.2 million raised from the sale of the Series 2 Convertible Notes.

Share issuance costs, which are netted against IPO proceeds, include $2.4 million of accrued costs for which the cash outflow had not yet occurred at June 30, 2022.

During the nine months ended September 30, 2022, there was $246.5 million of net cash provided by financing activities representing the $159.3 million of net cash raised upon the closing of our IPO on September 30, 2022, and $86.2 million raised from the sale of the Series 2 Convertible Notes.

Contractual Obligations and Commitments

As of June 30, 2022, we had the following material contractual obligations in addition to our mineral project payments described above.

As of September 30, 2022, we had the following material contractual obligations in addition to our mineral project payments described above.

Payments due by period (in thousands)

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Total contractual obligations

(a) Long-term obligations include the $24.0 million convertible bond issued by VRB that matures in 2026.

(a) Long-term obligations include the $24.0 million convertible bond issued by VRB that matures in 2026 if not converted to common shares of VRB prior such date.

At September 30, 2022, the value of the convertible bond including accrued interest was $26.4 million.

(b) Includes all other long-term financial liabilities reflected on our balance sheet that are contractually fixed as to timing and amount.

Off-Balance Sheet Arrangements

As of June 30, 2022, we were not involved in any off-balance sheet arrangements that have or are reasonably likely to have a material effect on our financial condition, results of operations, or liquidity.

As of September 30, 2022, we were not involved in any off-balance sheet arrangements that have or are reasonably likely to have a material effect on our financial condition, results of operations, or liquidity.

Critical Accounting Estimates

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The extent to which a valuation allowance is warranted may vary as a result of changes in our estimates of future taxable income.

In addition to the potential generation of future taxable income through the establishment of economic feasibility, development and operation of mines on the Company’s exploration assets, estimates of future taxable income could change in the event of disposal of assets, the identification of tax-planning strategies or changes in tax

laws that would allow the benefits of future deductible temporary differences in certain entities or jurisdictions to be offset against future taxable temporary differences in other entities or jurisdictions.

In addition to the potential generation of future taxable income through the establishment of economic feasibility, development and operation of mines on our exploration assets, estimates of future taxable income could change in the event of disposal of assets, the identification of tax-planning strategies or changes in tax laws that would allow the benefits of future deductible temporary differences in certain entities or jurisdictions to be offset against future taxable temporary differences in other entities or jurisdictions.

We recognize the effect of uncertain income tax positions if those positions are more likely than not of being sustained.

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The amount that is ultimately incurred for an individual uncertain tax position or for all uncertain tax positions in the aggregate could differ from the amount recognized.

We had no uncertain tax positions as of June 30, 2022.

We had no uncertain tax positions as of September 30, 2022.

Recently adopted accounting standards and recent accounting pronouncements

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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 2. Management’s Discussion and Analysis