Ivanhoe Electric Inc. 10-Q

Item 1. Financial Statements. IVANHOE ELECTRIC INC. Condensed Interim Consolidated Balance Sheets (Unaudited) (Expressed in thousands of U.S. dollars) March 31, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 106,995 $ 139,660 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: Investments subject to significant influence 6,118 5,998 Other investments 1,656 2,220 Exploration mineral interests 88,520 86,758 Property, plant and equipment 4,214 3,934 Intangible assets 546 1,249 Other non-current assets 8,157 9,296 Total assets $ 227,367 $ 260,486 Liabilities and Equity Current liabilities: Accounts payable and accrued liabilities $ 12,934 $ 13,943 Lease liabilities, current 831 706 Contract liability 3,572 2,783 17,337 17,432 Non-current liabilities: Deferred income taxes 3,878 3,888 Convertible debt 26,427 25,918 Due to related party 10,305 10,010 Lease liabilities, net of current portion 294 403 Other non-current liabilities 44 388 Total liabilities 58,285 58,039 Commitments and contingencies (Note 14) Equity: Common stock, par value $ 0.0001 ; 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) 9 9 Additional paid-in capital 414,897 409,683 Accumulated deficit ( 238,202 ) ( 202,128 ) Accumulated other comprehensive income ( 1,235 ) ( 1,189 ) Equity attributable to common stockholders 175,469 206,375 Non-controlling interests ( 6,387 ) ( 3,928 ) Total equity 169,082 202,447 Total liabilities and equity $ 227,367 $ 260,486 3 Table of Contents IVANHOE ELECTRIC INC. Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (Unaudited) (Expressed in thousands of U.S. dollars, except for share and per share amounts) Three Months Ended March 31, 2023 2022 Revenue $ 679 $ 6,762 Cost of sales ( 184 ) ( 52 ) Gross profit 495 6,710 Operating expenses: Exploration expenses 26,559 17,323 General and administrative expenses 10,633 5,226 Research and development expenses 1,843 1,331 Selling and marketing expenses 49 36 Loss from operations 38,589 17,206 Other expenses (income): Interest (income) expense, net ( 32 ) 762 Foreign exchange (gain) loss ( 161 ) 189 Loss (gain) on revaluation of investments 375 ( 4,659 ) Loss on revaluation of convertible debt — 2,632 Share of loss of equity method investees 622 — 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 Net loss 38,580 17,674 Other comprehensive loss (income), net of tax: Foreign currency translation adjustments 68 ( 106 ) Other comprehensive loss (income) 68 ( 106 ) Comprehensive loss $ 38,648 $ 17,568 Comprehensive loss attributable to: Common stockholders or parent 36,120 15,350 Non-controlling interests 2,528 $ 2,218 $ 38,648 $ 17,568 Net loss per share attributable to common stockholders Basic and diluted $ 0.39 $ 0.24 Weighted-average common shares outstanding Basic and diluted 92,964,249 63,925,334 4 Table of Contents IVANHOE ELECTRIC INC. Condensed Interim Consolidated Statements of Changes in Equity (Unaudited) (Expressed in thousands of U.S. dollars, except share amounts) Three months ended March 31, 2023 and 2022 Additional paid-in capital Accumulated deficit Accumulated other comprehensive Income (loss) Non-controlling interest Total Common Stock 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 Share-based compensation — — 882 — — 73 955 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; 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 March 31, 2023 92,971,865 $ 9 $ 414,897 $ ( 238,202 ) $ ( 1,235 ) $ ( 6,387 ) $ 169,082 5 Table of Contents IVANHOE ELECTRIC INC. Condensed Interim Consolidated Statements of Cash Flows (Unaudited) (Expressed in thousands of U.S. dollars) Three months ended March 31, 2023 and 2022 2023 2022 Operating activities Net loss $ ( 38,580 ) $ ( 17,674 ) Adjustments to reconcile net loss to cash provided by (used in) operating activities: Depreciation and amortization 1,040 1,053 Share-based compensation 5,132 955 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 (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 ) Accounts payable and accrued liabilities ( 1,108 ) 1,134 Other operating assets and liabilities 1,894 ( 245 ) Net cash used in operating activities ( 30,019 ) ( 14,619 ) Investing activities Purchase of mineral interests ( 1,763 ) ( 4,714 ) Purchase of property, plant and equipment and intangible assets ( 348 ) ( 93 ) Purchase of investments subject to significant influence ( 555 ) ( 793 ) Net cash used in investing activities ( 2,666 ) ( 5,600 ) Financing activities 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 Decrease in cash and cash equivalents ( 32,665 ) ( 20,081 ) Cash and cash equivalents, beginning of the year 139,660 49,850 Cash and cash equivalents, end of the period $ 106,995 $ 29,769 Supplemental cash flow information Cash paid for income taxes 1,069 $ 208 Supplemental disclosure of non-cash investing and financing activities Issuance of common stock; earn-in payment $ 150 $ — 6 Table of Contents IVANHOE ELECTRIC INC. Notes to the Condensed Interim Consolidated Financial Statements (Unaudited - Tabular amounts expressed in thousands of U.S. dollars, unless otherwise indicated) 1. Background and basis of preparation: Ivanhoe Electric Inc. (“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. 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: • 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 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 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 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 82.5 % 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: In June 2022, the Company’s stockholders approved an amendment to the Company’s certificate of incorporation to effect a reverse stock split of the Company’s outstanding common stock at a ratio of 3 -for-1 (the “Reverse Stock Split”) effective as of June 16, 2022. 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 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. 2. Significant accounting policies: 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. There 7 Table of Contents IVANHOE ELECTRIC INC. Notes to the Condensed Interim Consolidated Financial Statements (Unaudited - Tabular amounts expressed in thousands of U.S. dollars, unless otherwise indicated) 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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. 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. 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. 3. Use of estimates: 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. The significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated and combined carve-out financial statements for the year ended December 31, 2022. 4. Cash and cash equivalents: 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) . 5. Investments subject to significant influence: The Company’s principal investment subject to significant influence is Sama Resources Inc. (“Sama”). Others include its investments in Fjordland Exploration Inc. (“Fjordland”) and Sama Nickel Corporation (“SNC”). 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 March 31, 2023 $ 4,988 $ 309 $ 821 $ 6,118 8 Table of Contents IVANHOE ELECTRIC INC. Notes to the Condensed Interim Consolidated Financial Statements (Unaudited - Tabular amounts expressed in thousands of U.S. dollars, unless otherwise indicated) 6. Exploration mineral interests: Santa 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 Foreign currency translation — — ( 1 ) — — ( 1 ) Balance at March 31, 2023 $ 40,880 $ 28,901 $ 2,524 $ 15,315 $ 900 $ 88,520 7. Convertible debt: VRB Convertible Bond Balance at December 31, 2022 $ 25,918 Interest expense 509 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. 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; and • 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 %. 8. Equity: (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. 9 Table of Contents IVANHOE ELECTRIC INC. Notes to the Condensed Interim Consolidated Financial Statements (Unaudited - Tabular amounts expressed in thousands of U.S. dollars, unless otherwise indicated) Grant date: 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. 9. Revenue: The Company recognized revenue from the following sources: Three months ended March 31: Revenue type 2023 2022 Software licensing $ 400 $ 6,702 Data processing services 279 60 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. 10 Table of Contents IVANHOE ELECTRIC INC. Notes to the Condensed Interim Consolidated Financial Statements (Unaudited - Tabular amounts expressed in thousands of U.S. dollars, unless otherwise indicated) 10. Exploration expense: Three months ended March 31: Project 2023 2022 Santa Cruz, USA $ 14,682 $ 9,798 San Matias, Colombia 4,658 2,376 Tintic, USA 1,121 289 Hog Heaven, USA 638 560 White Hill, USA (Note a) 491 — Lincoln, USA 295 13 Carolina, USA 238 — 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. 11. Related party transactions: Related parties include entities with common direct or indirect shareholders and/or directors. 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 following table summarizes transactions between the Company and significant related parties. Balance outstanding as at Transactions for the three months ended March 31, March 31, 2023 December 31, 2022 2023 2022 Total Expenses Global Mining (Note a) 1,538 1,383 4,316 2,737 Ivanhoe Capital Aviation (Note b) — 83 250 250 I-Pulse (Note c) — — 1,157 — Total 1,538 1,466 5,723 2,987 Advances Global Mining (Note a) 1,988 1,987 — — Deposit I-Pulse (Note c) 5,971 7,128 — — Loan JCHX Mining Management Co., Ltd (Note d) 10,305 10,010 — — 11 Table of Contents 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 three months ended March 31, 2023 2022 Expense classification Exploration expenses 3,042 1,515 General and administrative expenses 2,031 1,472 Research and development expenses 650 — 5,723 2,987 (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 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. (c) I-Pulse Inc. (“I-Pulse”) is a significant shareholder of the Company. 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. 12. 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: March 31, 2023 December 31, 2022 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Financial assets: Investments subject to significant influence 5,297 — — 5,108 — — Other investments 1,656 — — 2,220 — — Total financial assets $ 6,953 $ — $ — $ 7,328 $ — $ — Financial liabilities: Total financial liabilities $ — $ — $ — $ — $ — $ — 12 Table of Contents 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. 13. Segment reporting: 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. Based upon such evaluation, the Company has determined that it has three reportable segments. The Company’s reportable segments are critical metals, data processing and energy storage. Critical metals is focused on mineral project exploration and development with a focus on identifying and developing mineral projects, and ultimately mines, associated with the metals necessary for electrification. The data processing segment provides data analytics, geophysical modeling, software licensing and artificial intelligence services for the mineral, oil & gas and water exploration industries. The energy storage segment develops, manufactures and installs vanadium flow batteries for grid-scale energy storage. Segment information for the periods presented is as follows: Three months ended March 31, 2023 Critical Metals Data Processing Energy Storage Total Revenue $ — $ 679 $ — $ 679 Intersegment revenues — 48 — 48 Loss (income) from operations 36,159 399 2,031 38,589 Segment Assets 208,441 3,633 15,293 227,367 Three months ended March 31, 2022 Critical Metals Data Processing Energy Storage Total Revenue $ — $ 6,762 $ — $ 6,762 Intersegment revenues — 43 — 43 Loss (income) from operations 20,780 ( 5,549 ) 1,975 17,206 Segment Assets 106,792 8,529 26,334 141,655 14. 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. 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. 15. Subsequent events: (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 13 Table of Contents 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 . 14