What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-15 compared with 2022-11-14 · 211 added, 247 removed, 206 unchanged (69% of the section changed)

3 unchanged sentences

(Expressed in thousands of U.S.

September 30,

2023 December 31,

Current assets:

1 unchanged sentence

Accounts receivable 2,207 1,497

Inventory 5,869 5,648

Prepaid expenses and deposits 3,085 4,226

118,156 151,031

Non-current assets:

5 unchanged sentences

Other non-current assets 8,157 9,296

Total assets $ 227,367 $ 260,486

Liabilities and Equity

1 unchanged sentence

Accounts payable and accrued liabilities $ 12,934 $ 13,943

Deferred consideration payable

Lease liabilities, current 831 706

Contract liability 3,572 2,783

17,337 17,432

Non-current liabilities:

1 unchanged sentence

Convertible debt 26,427 25,918

Due to related party 10,305 10,010

Lease liabilities, net of current portion 294 403

2 unchanged sentences

Commitments and contingencies (Note 14)

Preferred stock, par value $ 0.0001 ;

50,000,000 shares authorized;

none issued and outstanding

Common stock, par value $ 0.0001 ;

700,000,000 shares authorized;

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

700.0 million shares authorized;

93.0 million shares issued and outstanding as of March 31, 2023 (December 31, 2022 - 700.0 million shares authorized;

93.0 million issued and outstanding)

Additional paid-in capital 414,897 409,683

3 unchanged sentences

Non-controlling interests ( 6,387 ) ( 3,928 )

Total equity 169,082 202,447

Total liabilities and equity $ 227,367 $ 260,486

IVANHOE ELECTRIC INC.

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

Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (Unaudited)

(Expressed in thousands of U.S.

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

Revenue $ 679 $ 6,762

Cost of sales ( 184 ) ( 52 )

Gross profit 495 6,710

Operating expenses:

5 unchanged sentences

Other expenses (income):

Interest expense, net

Foreign exchange loss (gain)

Interest (income) expense, net ( 32 ) 762

Foreign exchange (gain) loss ( 161 ) 189

Loss (gain) on revaluation of investments 375 ( 4,659 )

1 unchanged sentence

Share of loss of equity method investees 622 —

Other expenses (income), net

Other (income) expenses, net ( 741 ) 223

Loss before income taxes 38,652 16,353

Income taxes ( 72 ) 1,321

Net loss 38,580 17,674

Less loss attributable to non-controlling interests ( 2,506 ) ( 2,222 )

Net loss attributable to common stockholders or parent 36,074 15,452

Other comprehensive income, net of tax:

Net loss 38,580 17,674

Other comprehensive loss (income), net of tax:

Foreign currency translation adjustments 68 ( 106 )

Other comprehensive income

Other comprehensive loss (income) 68 ( 106 )

Comprehensive loss $ 38,648 $ 17,568

2 unchanged sentences

Non-controlling interests 2,528 $ 2,218

$ 38,648 $ 17,568

Net loss per share attributable to common stockholders

3 unchanged sentences

IVANHOE ELECTRIC INC.

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

Condensed Interim Consolidated Statements of Changes in Equity (Unaudited)

(Expressed in thousands of U.S.

dollars, except share amounts)

Nine months ended September 30, 2022 and 2021

Three months ended March 31, 2023 and 2022

capital Accumulated

deficit Accumulated

comprehensive

Non-controlling

Income (loss)

Balance at January 1, 2021

Other comprehensive income (loss)

Net transfer from parent

Other changes in non-controlling interests

Balance at March 31, 2021

Other comprehensive loss

Net transfer from parent

Restructuring upon spin off (Note 1)

Share based compensation

Other changes in non-controlling interests

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

Income (loss) Non-controlling

interest Total

Shares Amount

Balance at January 1, 2022 63,925,334 $ 6 $ 75,743 $ ( 52,314 ) $ ( 1,502 ) $ 5,881 $ 27,814

Net loss — — — ( 15,452 ) — ( 2,222 ) ( 17,674 )

Other comprehensive income — — — — 102 4 106

1 unchanged sentence

Balance at March 31, 2022 63,925,334 $ 6 $ 76,625 $ ( 67,766 ) $ ( 1,400 ) $ 3,736 $ 11,201

Balance at January 1, 2023 92,960,584 $ 9 $ 409,683 $ ( 202,128 ) $ ( 1,189 ) $ ( 3,928 ) $ 202,447

Net loss — — — ( 36,074 ) — ( 2,506 ) ( 38,580 )

Other comprehensive loss — — — — ( 46 ) ( 22 ) ( 68 )

Issuance of common stock, net of issuance costs

Issuance of common stock upon conversion of debt

Issuance of common stock upon settlement of liability

Share-based compensation

Other changes in non-controlling interests

Balance at June 30, 2022

Other comprehensive income

Share issuance costs

Issuance of common stock;

earn-in payment 10,281 — 150 — — — 150

Stock options exercised 1,000 — 3 — — — 3

Share-based compensation — — 5,067 — — 65 5,132

Other changes in non-controlling interests — — ( 6 ) — — 4 ( 2 )

Balance at September 30, 2022

Balance at March 31, 2023 92,971,865 $ 9 $ 414,897 $ ( 238,202 ) $ ( 1,235 ) $ ( 6,387 ) $ 169,082

IVANHOE ELECTRIC INC.

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

Condensed Interim Consolidated Statements of Cash Flows (Unaudited)

(Expressed in thousands of U.S.

Nine months ended September 30, 2022 and 2021

Three months ended March 31, 2023 and 2022

Operating activities

Net loss $ ( 38,580 ) $ ( 17,674 )

Adjustments to reconcile net loss to cash provided by (used in) operating activities:

Depreciation of property, plant and equipment

Amortization of intangible assets

Amortization of operating lease right-of-use-assets

Depreciation and amortization 1,040 1,053

Share-based compensation 5,132 955

Unrealized foreign exchange loss (gain)

Non-cash exploration expense 662 —

Non-cash research and development expense 645 —

Unrealized foreign exchange (gain) loss ( 155 ) 225

Interest expense 804 758

Income taxes ( 72 ) 1,321

Loss on revaluation of convertible debt — 2,632

Loss on de-recognition of mineral interest

Loss on revaluation of investments

Loss (Gain) on revaluation of investments 375 ( 4,659 )

Share of loss of equity method investees 622 —

Other ( 141 ) 344

Changes in other operating assets and liabilities:

Trade accounts receivable ( 710 ) 253

Inventory ( 144 ) ( 449 )

Operating lease liabilities ( 283 ) ( 267 )

8 unchanged sentences

Financing activities

Net proceeds from issuance of common stock

Proceeds from Ivanhoe Electric convertible notes

Proceeds from VRB convertible bond, net of issuance costs

Net transfer from parent

Proceeds from subsidiary financings

Proceeds from exercise of stock options 3 —

Net cash provided by financing activities 3 —

Effect of foreign exchange rate changes on cash and cash equivalents 17 138

Increase in cash and cash equivalents

Decrease in cash and cash equivalents ( 32,665 ) ( 20,081 )

Cash and cash equivalents, beginning of the year 139,660 49,850

3 unchanged sentences

Supplemental disclosure of non-cash investing and financing activities

Issuance of common stock upon conversion of debt

Issuance of common stock upon settlement of liability

Settlement of loan from parent

Issuance of common stock in exchange for assets (Note 1)

Issuance of common stock;

earn-in payment $ 150 $ —

IVANHOE ELECTRIC INC.

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

Notes to the Condensed Interim Consolidated Financial Statements

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

2 unchanged sentences

Ivanhoe Electric Inc.

(“Ivanhoe Electric” or “the Company”) was incorporated in the State of Delaware, USA, on July 14, 2020, as a wholly-owned subsidiary of High Power Exploration Inc.

(“the Parent” or “HPX”).

On April 30, 2021, HPX completed a restructuring whereby HPX contributed (i) all of the issued and outstanding shares of HPX’s subsidiaries, other than those holding direct or indirect interests in its Nimba Iron Ore Project (“Nimba Project”);

(ii) certain property, plant and equipment;

and (iii) certain financial assets (collectively the “Contributed Assets”) in exchange for common stock of Ivanhoe Electric.

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” or “the Company”) was incorporated in the State of Delaware, USA, on July 14, 2020.

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.

5 unchanged sentences

(“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 September 30, 2022 (December 31, 2021 — 90.0 % ).

Ivanhoe Electric had an ownership interest in VRB of 90.0 % as at March 31, 2023 (December 31, 2022 — 90.0 %).

• Computational Geosciences Inc.

(“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 % ).

Ivanhoe Electric had an ownership interest in CGI of 94.3 % as at March 31, 2023 (December 31, 2022 — 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 % ).

Ivanhoe Electric had an ownership interest in Cordoba of 63.3 % as at March 31, 2023 (December 31, 2022 — 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.

Up to the date of restructuring, these financial statements have been prepared on a combined basis and the Parent’s net investment in the Company’s operations is shown in lieu of stockholders’ equity.

All intercompany balances and transactions have been eliminated in the condensed interim consolidated and combined carve-out financial statements.

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)

Prior to the restructuring, the financing of operations was historically managed by the Parent.

Net parent investment represents the Parent’s historical investment in the Company and includes accumulated net earnings or losses attributable to the Parent, intercompany balances that were capitalized at the time of the restructuring and direct capital contributions and expense allocations from the Parent to the Company.

Assets contributed to Ivanhoe Electric at the time of restructuring have been recorded by the Company during the periods the assets were under the control of the Parent, except for certain loan receivables and advances that have not been allocated to the Company prior to the restructuring completion date (Note 12).

A description of the costs allocated to the Company is included in Note 12.

Management believes the assumptions underlying the condensed interim consolidated and combined carve-out financial statements, including the assumptions regarding allocation of expenses, are systematic, rational and reasonable.

Nevertheless, the condensed interim consolidated and combined carve-out financial statements may not include all of the actual expenses that would have been incurred by the Company on a stand-alone basis, and may not accurately reflect the Company’s historical financial position, results of operations and cash flows that would have been reported if the Company had been a stand-alone entity during the periods prior to the restructuring.

The amounts that would have been or will be incurred on a stand-alone basis could differ from the amounts allocated due to economies of scale, management judgment, cash management and financing obtained as a stand-alone company, or other factors.

Basis of preparation — Subsequent to the restructuring:

The Company’s financial statements for the periods subsequent to April 30, 2021 are consolidated financial statements based on the reported results of Ivanhoe Electric as a stand-alone company.

Ivanhoe Electric had an ownership interest in Kaizen of 82.5 % as at March 31, 2023 (December 31, 2022 — 82.7 %).

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all information and disclosures required by generally accepted accounting principles in the United States.

Therefore, this information should be read in conjunction with the Company's consolidated and combined carve-out financial statements and notes contained on its Form 10-K for the year ended December 31, 2022.

The information furnished herein reflects all normal recurring entries, that are in the opinion of management, necessary for a fair statement of the results for the interim periods reported.

Operating results for the three month period ended March 31, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Reverse stock split:

1 unchanged sentence

The number of authorized shares and the par value of the common stock were not adjusted as a result of the Reverse Stock Split.

For periods before June 16, 2022, all references to common stock, options to purchase common stock, per share data, and related information contained in the condensed interim consolidated and combined carve-out financial statements have been retrospectively adjusted to reflect the effect of the Reverse Stock Split.

The condensed consolidated and combined carve-out financial statements have been prepared on a going concern basis, which presumes the realization of assets and satisfaction of liabilities in the normal course of business.

For periods before June 16, 2022, all references to common stock, options to purchase common stock, per share data, and related information contained in the condensed interim consolidated financial statements have been retrospectively adjusted to reflect the effect of the Reverse Stock Split.

The condensed interim consolidated financial statements have been prepared on a going concern basis, which presumes the realization of assets and satisfaction of liabilities in the normal course of business.

References to “$” refer to United States dollars and “Cdn$” to Canadian dollars.

Significant accounting policies:

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.

The condensed interim consolidated and combined carve-out financial statements have been prepared in accordance with U.S.

GAAP for interim financial information.

Accordingly, they do not include all financial information and disclosures required by U.S.

GAAP for complete financial statements and should be read in conjunction with the Company’s audited consolidated and combined carve-out financial statements for the year ended December 31, 2021.

The Company discloses in its consolidated and combined carve-out financial statements for the year ended December 31, 2021, those accounting policies that it considers significant in determining its results of operations and financial position.

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 discloses in its consolidated financial statements for the year ended December 31, 2022, those accounting policies that it considers significant in determining its results of operations and financial position.

IVANHOE ELECTRIC INC.

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

Notes to the Condensed Interim Consolidated Financial Statements

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

dollars, unless otherwise indicated)

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.

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, 2022.

Recent accounting pronouncements not yet adopted:

In August 2020, the FASB issued ASU 2020-06 Debt — Debt with Conversion and Other Options (Topic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Topic 815-40):

1 unchanged sentence

The update is to address issues identified as a result of the complexity associated with applying generally accepted accounting principles for certain financial instruments with both liability and equity characteristics.

Non-public entities and emerging growth companies applying extended transition periods for new or revised accounting standards are required to adopt the update effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years with early adoption permitted.

The Company is currently evaluating the expected impact on the financial statements.

The Company is required to adopt ASU 2020-06 for fiscal years beginning after December 15, 2023 and is currently evaluating the expected impact on the consolidated financial statements.

In June 2022, the FASB issued ASU 2022-03 Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.

The update is to clarify the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security.

The update clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.

The Company intends to adopt ASU 2022-03 on January 1, 2024 and is currently evaluating the expected impact on the consolidated financial statements.

Use of estimates:

The preparation of consolidated financial statements in conformity with U.S.

GAAP requires management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, the related disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses.

The preparation of consolidated financial statements requires management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, the related disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses.

Actual results may differ from these estimates.

1 unchanged sentence

Cash and cash equivalents:

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.

Of the total cash and cash equivalents at March 31, 2023 and December 31, 2022, $ 10.2 million and $ 20.7 million, respectively, was not available for the general corporate purposes of the Company as it was held by non-wholly-owned subsidiaries.

At March 31, 2023, the Company does no t have any cash equivalents in the form of redeemable short-term investments (December 31, 2022 - $ 2.3 million) .

Investments subject to significant influence:

2 unchanged sentences

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

Carried at fair value

Equity method

Carried at fair value Equity method

Sama Fjordland SNC Total

Balance at December 31, 2022 4,799 309 890 5,998

Change in fair value 189 — — 189

Investment — — 555 555

Share of loss — — ( 622 ) ( 622 )

Foreign currency translation — — ( 2 ) ( 2 )

Balance at September 30, 2022

Balance at March 31, 2023 $ 4,988 $ 309 $ 821 $ 6,118

IVANHOE ELECTRIC INC.

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

Notes to the Condensed Interim Consolidated Financial Statements

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

1 unchanged sentence

Exploration mineral interests:

Cruz Tintic Pinaya San

Matias Other Total

Balance at December 31, 2022 $ 40,880 $ 27,138 $ 2,525 $ 15,315 $ 900 $ 86,758

Acquisition costs — 1,763 — — — 1,763

De-recognition (Note a)

Foreign currency translation — — ( 1 ) — — ( 1 )

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:

Upon completion of the Company’s IPO on June 30, 2022, the deferred consideration payable was settled with Central Arizona Resources Ltd.

The Company paid CAR $ 15.0 million in cash and issued 945,626 shares of common stock to CAR in accordance with the original terms of the agreement.

Balance at March 31, 2023 $ 40,880 $ 28,901 $ 2,524 $ 15,315 $ 900 $ 88,520

Convertible debt:

Notes (Note a)

bond (Note b)

Balance at December 31, 2022 $ 25,918

Debt issuance

Interest expense 509

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 September 30, 2022

(a) Ivanhoe Electric convertible notes:

(i) Series 1 Convertible Notes:

Between August 3, 2021 and November 17, 2021, the Company completed a financing which included the issuance of $ 50.0 million aggregate principal amount of unsecured convertible promissory notes (“Series 1 Convertible Notes”).

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:

On April 5, 2022, the Company completed a financing in which it issued $ 86.2 million aggregate principal amount of unsecured convertible promissory notes (“Series 2 Convertible Notes”).

The Series 2 Convertible Notes were unsecured and bore interest at 3 % per annum, in arrears and payable on the maturity date of July 31, 2023.

Upon completion of the Company’s IPO on June 30, 2022, the Series 2 Convertible Notes, including accrued interest of $ 0.6 million, were automatically converted into 8,209,035 shares of common stock of the Company at a conversion price of $ 10.58 per share being a 10 % discount to the gross price per share at which common stock was sold in the IPO (Note 9).

The convertible notes along with their embedded features did not contain any equity components, and therefore were recognized as a liability on issuance.

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

VRB Convertible bond:

Balance at March 31, 2023 $ 26,427

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

The bond has a five-year term and interest accrues at a rate of 8 % per annum.

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

Common stock transactions

On June 30, 2022, the Company completed an IPO of 14,388,000 shares of common stock which were issued at a price of $ 11.75 per share for gross proceeds of $ 169.1 million.

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

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.

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.

Prior to the maturity date, the convertible bond is automatically converted into equity of VRB upon an equity financing or sale event, at a price per share equal to the lower of:

• the transaction price of the equity financing or sale event;

• the valuation cap price of $ 158.0 million divided by the total shares outstanding at the time of the event.

If no equity financing or sale event occurs, VRB must repay the outstanding principal and interest on maturity.

The Company has accounted for the convertible bond, including its embedded features, as a debt instrument accounted at amortized cost, as it was determined the embedded features are not required to be bifurcated.

Directly attributable transaction costs of $ 1.1 million were recorded against the carrying value of the debt and are amortized using the effective interest method at a rate of 9.1 %.

(a) Stock-based compensation:

(i) Stock options:

During the three months ended March 31, 2023, the Company granted stock options to certain new management of the Company.

The options have a seven-year term and comprise three equal tranches vesting in one-third annual increments beginning one year from the grant date.

The stock options were granted at an exercise price equal to the closing stock price on the grant date.

The fair value of each stock option is estimated on the date of grant using the Black-Scholes option valuation model.

Expected volatility was calculated based on the historical volatility of a group of peer companies’ common stock and a group of relevant stock market indices over the expected option life.

Management exercised judgment in determining the expected life of the options and considered factors such as the contractual term of the options, the vesting schedule and expected volatility.

The risk-free interest rate is based on Federal Reserve rates in effect for bonds with maturity dates equal to the expected term of the option.

Information related to stock options granted during the three months ended March 31, 2023 is presented below.

IVANHOE ELECTRIC INC.

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

Notes to the Condensed Interim Consolidated Financial Statements

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

dollars, unless otherwise indicated)

February 1, 2023 Grant date:

March 1, 2023

Exercise price $ 13.23 $ 15.46

Number of options granted 500,000 100,000

Weighted average assumptions used to value stock option awards:

Expected volatility 69.8 % 69.5 %

Expected life of options (in years) 4 4

Expected dividend rate 0 % 0 %

Risk-free interest rate 3.73 % 4.52 %

Weighted average grant-date fair value (per option) $ 7.22 $ 8.53

(ii) Stock settled restricted stock units ("RSUs"):

On January 1, 2023, Ivanhoe Electric granted 750,000 stock-settled RSUs to a new executive of the Company.

The RSUs comprise five equal tranches vesting in one-fifth annual increments beginning one year from the grant date.

The fair value of the stock-settled RSUs is amortized over the vesting period.

The total fair value of the January 1, 2023 RSU grant was $ 9.1 million.

The Company recognized revenue from the following sources:

Three months ended

Nine months ended

September 30:

Software licensing (Note a)

Revenue type 2023 2022

Software licensing $ 400 $ 6,702

Data processing services 279 60

Renewable energy storage systems (Note b)

(a) On October 15, 2021, the Company entered into a software license agreement whereby the Company provided software that can be used by the licensee in perpetuity for a one-time fee of $ 6.5 million, which was received in January 2022 and at which time its performance obligation with respect to the license was met.

As such, in accordance with the Company’s accounting policy for the sale of software licenses, the license fee revenue was recognized in 2022.

Software licensing revenue includes associated services included in the software license agreement.

This revenue is included in the data processing segment.

(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:

Renewable energy storage systems (Note a) — —

Total $ 679 $ 6,762

(a) At March 31, 2023, the Company had a contract liability of $ 3.6 million (December 31, 2022 — $ 2.8 million) relating to the sale of renewable energy storage systems.

IVANHOE ELECTRIC INC.

Notes to the Condensed Interim Consolidated Financial Statements

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

dollars, unless otherwise indicated)

Exploration expense:

Three months ended

Nine months ended

September 30:

Santa Cruz, USA (Note a)

Project 2023 2022

Santa Cruz, USA $ 14,682 $ 9,798

San Matias, Colombia 4,658 2,376

Perseverance, USA

Yangayu, Papua New Guinea

Tintic, USA 1,121 289

Hog Heaven, USA 638 560

White Hill, USA (Note a) 491 —

Lincoln, USA 295 13

Carolina, USA 238 —

Bitter Creek, USA

Ivory Coast Project, Ivory Coast

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)).

Pinaya, Peru 157 686

Generative exploration and other 4,279 3,601

Total $ 26,559 $ 17,323

(a) White Hill project:

On February 22, 2023, the Company entered into an agreement with Exiro Minerals USA Corp.

(“Exiro”) which gives the Company the right to earn an 80 % interest in the White Hill Project located in the Gillis Range, Mineral County, Nevada, by incurring $ 10.0 million of expenditures and making payments to Exiro totaling $ 5.0 million ($ 3.6 million in cash and $ 1.4 million in our common stock) within six years of signing the agreement.

Related party transactions:

1 unchanged sentence

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions.

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

Prior to completing the restructuring described in Note 1, the Parent incurred corporate and technical costs attributable to the Company and the Nimba Project.

Accordingly, the condensed interim consolidated and combined carve-out financial statements include costs allocations from the Parent, including executive oversight, occupancy, office overhead, accounting, tax, treasury, legal, information technology, human resources and mineral exploration.

These allocations were made on the basis of direct usage.

All such amounts were deemed incurred and settled by the Company in the period in which the costs were recorded and are included in net parent investment.

Allocated costs for the four months ended April 30, 2021 totaled $ 1.3 million and are solely from the period prior to the restructuring.

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

Other related parties

The following table summarizes transactions between the Company and significant related parties.

Transactions for the

Balance outstanding as at Transactions for the

three months ended

nine months ended

Balance outstanding as at

September 30,

2023 December 31,

2022 2023 2022

Total Expenses

2 unchanged sentences

I-Pulse (Note c) — — 1,157 —

Total 1,538 1,466 5,723 2,987

Global Mining (Note a) 1,988 1,987 — —

I-Pulse (Note c) 5,971 7,128 — —

JCHX Mining Management Co., Ltd (Note d) 10,305 10,010 — —

IVANHOE ELECTRIC INC.

Notes to the Condensed Interim Consolidated Financial Statements

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

dollars, unless otherwise indicated)

Transactions for the

Transactions for the nine

three months ended

September 30,

Expense classification

General and administrative expenses

Exploration expenses 3,042 1,515

General and administrative expenses 2,031 1,472

Research and development expenses 650 —

(a) Global Mining Management Corp.

(“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 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.

(b) Ivanhoe Capital Aviation (“ICA”) is an entity beneficially owned by the Company’s Chief Executive Officer and Chairman.

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

The Company held 7.1 % of Global Mining’s outstanding common shares at March 31, 2023 (December 31, 2022 — 7.1 %).

(b) Ivanhoe Capital Aviation (“ICA”) is an entity beneficially owned by the Company’s Executive Chairman.

ICA provides use of its aircraft to the Company.

1 unchanged sentence

(“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 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.

On October 24, 2022 the Company entered into an agreement with I-Pulse, to purchase six Typhoon™ transmitters to be delivered in stages over approximately three years .

The total purchase price for the six Typhoon™ transmitters is $ 12.4 million, which includes research and development costs of $ 2.8 million.

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

The Company is recognizing the research and development costs and annual maintenance costs on a straight line basis in the condensed interim consolidated statement of loss.

In October 2022, the Company made deposit payments totaling $ 7.1 million, representing 50 % of each component of the agreement.

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

(d) JCHX Mining Management Co., Ltd (“JCHX") held 19.9 % of Cordoba’s issued and outstanding common stock as at March 31, 2023 (December 31, 2022 - 19.9 %).

In December 2022, JCHX advanced a bridge loan of US$ 10 million to Cordoba.

The bridge loan is for an 18-month term and bears interest at 12 % per annum during the first 12 months of the term and 14 % per annum during the remaining six months.

Upon closing the project financing transaction described in Note 15, all of the principal and interest outstanding on the bridge loan was applied towards that transaction’s first installment as a payment in kind.

In the event the bridge loan was not repaid, JCHX had the option to receive payment in kind equal to 20 % of the total issued shares of CMH Colombia S.A.S.

(“CMH”), a Colombian subsidiary of Cordoba.

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:

September 30, 2022

December 31, 2021

March 31, 2023 December 31, 2022

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

Financial assets:

3 unchanged sentences

Financial liabilities:

Convertible notes

Deferred consideration payable

Total financial liabilities $ — $ — $ — $ — $ — $ —

The Ivanhoe Electric Series 1 and Series 2 Convertible Notes were converted into common stock of the Company on June 30, 2022 (Note 8(a)).

IVANHOE ELECTRIC INC.

Notes to the Condensed Interim Consolidated Financial Statements

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

dollars, unless otherwise indicated)

There were no movements in level three instruments for the three months ended March 31, 2023.

Segment reporting:

The Company’s Chief Executive Officer and Chairman is the Chief Operating Decision Maker (“CODM”) of the Company.

The Company’s President & Chief Executive Officer and its Executive Chairman combine to form the Chief Operating Decision Maker (“CODM”) of the Company.

The CODM evaluates how the Company allocates resources, assesses performance and makes strategic and operational decisions.

4 unchanged sentences

The energy storage segment develops, manufactures and installs vanadium flow batteries for grid-scale energy storage.

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)

Segment information for the periods presented is as follows:

Three months ended September 30, 2022

Nine months ended September 30, 2022

Three months ended March 31, 2023

Processing Energy

Storage Total

Revenue $ — $ 679 $ — $ 679

Intersegment revenues — 48 — 48

1 unchanged sentence

Segment Assets 208,441 3,633 15,293 227,367

Three months ended September 30, 2021

Nine months ended September 30, 2021

Three months ended March 31, 2022

Processing Energy

Storage Total

Revenue $ — $ 6,762 $ — $ 6,762

Intersegment revenues — 43 — 43

2 unchanged sentences

Commitments and contingencies:

The Company has entered into a contractual arrangement to purchase six Typhoon™ transmitters from I-Pulse (Note 11).

In the ordinary course of business, the Company may be involved in various legal proceedings and subject to claims that arise.

1 unchanged sentence

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.

(a) On May 8, 2023, Cordoba announced that Cordoba and JCHX had satisfied all necessary conditions to close the $ 100 million strategic arrangement for the joint development of the Alacran Project in Colombia.

As a result of the closing, JCHX has funded the initial installment of $ 40 million towards its 50 % ownership interest in CMH, which owns 100 % of the Alacran Project and is the joint venture vehicle for Cordoba and JCHX in this strategic project level partnership.

For its 50 % interest, JCHX will pay the $ 100 million purchase price in three installments.

The first payment of $ 40 million was made by JCHX at closing.

A second installment of $ 40 million is payable in cash upon the board of

IVANHOE ELECTRIC INC.

Notes to the Condensed Interim Consolidated Financial Statements

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

dollars, unless otherwise indicated)

directors of Cordoba approving the Feasibility Study of the Alacran Project, and the filing of the Environmental Impact Assessment (“EIA”) to the relevant Colombian Government authority, but in no event shall such second installment be paid later than the second anniversary of the closing of the transaction.

A third and final installment of $ 20 million is payable in cash once the approval of the EIA is obtained, which must be within two years of the transaction’s closing date.

Should the EIA not be approved by the second anniversary of the closing date, JCHX will have the option to elect not to complete this final installment, which will result in JCHX being diluted to 40 % and Cordoba increasing to a majority 60 % shareholding in CMH.

In December 2022, JCHX advanced a bridge loan of $ 10 million to Cordoba.

Upon closing of the transaction, the entire balance owing under the bridge loan and accrued interest was applied towards the first installment as a payment in kind.

(b) On May 10, 2023, Ivanhoe Electric signed a binding purchase and sale agreement (“PSA”) for the acquisition of surface land at its Santa Cruz Project in Arizona.

The acquisition totals 6,205 acres of surface title and associated water rights.

Under the terms of the PSA, Ivanhoe Electric will acquire the land for a total purchase price of $ 120.5 million to be paid in installments, as follows:

• $ 5.0 million deposit, paid May 11, 2023, becomes non-refundable upon successful completion of due diligence;

• $ 34.3 million payable at the time of closing, expected in May 2023, inclusive of the $ 5.0 million deposit;

• $ 34.3 million, plus accrued interest, payable on or before six months following the date of closing;

• Four equal principal payments of $ 13.0 million on the first, second, third and fourth anniversaries of the Second Closing Payment, plus applicable accrued interest.

Interest on future payments will accrue at a rate of Prime plus 1 %.

(c) On May 15, 2023, Ivanhoe Electric signed a definitive agreement with Saudi Arabian Mining Company Ma’aden (“Ma’aden”) which finalized the terms of the transactions previously announced on January 11, 2023.

The transactions include the establishment of a 50/50 exploration joint venture between Ma’aden and Ivanhoe Electric to explore approximately 48,500 km2 of prospective land in Saudi Arabia and a $ 126.5 million strategic investment by Ma'aden in Ivanhoe Electric common stock.

The Company expects to issue approximately 10.2 million common shares to Ma’aden, representing 9.9 % of common shares outstanding, at a purchase price of $ 12.38 per share.

Of the $ 126.5 million total proceeds from the private placement, $ 66 million will go to the joint venture to fund exploration activities, including the purchase of three new Typhoon TM machines.

The remaining $ 60 million will be retained by Ivanhoe Electric to advance our portfolio of US mineral projects, and for working capital and general corporate purposes.

At closing, Ivanhoe Electric will grant Ma’aden a top-up right allowing Ma’aden to maintain its 9.9 % ownership, and Ma’aden will agree to a five-year standstill limiting its shareholding to a maximum of 19.9 %, subject to certain exceptions.

Ma’aden will have the right to appoint a nominee to the Ivanhoe Electric board of directors .

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