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Item 7. Management’s Discussion and Analysis

2024-02-26 compared with 2023-03-14 · 163 added, 190 removed, 160 unchanged (69% of the section changed)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated and combined carve-out financial statements and the related notes to those statements included elsewhere in this Annual Report.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes to those statements included elsewhere in this Annual Report.

In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.

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See “Cautionary Note Regarding Forward-Looking Statements.”

Separation from HPX

We were incorporated under the laws of the State of Delaware on July 14, 2020, as a wholly-owned subsidiary of HPX.

On April 30, 2021, HPX completed a reorganization 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 in Guinea;

(ii) certain property, plant and equipment;

and (iii) certain financial assets in exchange for shares of our common stock.

HPX then distributed the shares of our common stock to HPX stockholders by way of a dividend, with each HPX stockholder receiving one share of our common stock for each HPX share of common stock then held by the stockholder.

The Company has historically operated as part of the HPX business and not as a standalone company.

Financial information for historical periods presented prior to April 30, 2021, the spinoff date, were derived from the consolidated financial statements and accounting records of HPX prepared on a carve-out and combined basis.

The combined carve-out financial information may not be indicative of our future performance and does not necessarily reflect what the financial position, results of operations, and cash flows would have been had we operated as an independent company during such periods, particularly because of changes arising subsequently as a result of the separation, including changes in the financing, cash management, operations, cost structure, and personnel needs of our business.

The combined carve-out financial information for periods prior to April 30, 2021 included certain assets and liabilities that were historically held at the HPX corporate level, but are specifically identifiable to or otherwise attributable to us.

Prior to completing the spinoff, HPX incurred corporate and technical costs attributable to the Company and the Nimba Iron Ore Project.

Accordingly, the combined carve-out financial information includes cost allocations from HPX, 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 in the consolidated financial statements up to the date of the spinoff.

Allocated costs for the period from January 1, 2021 to April 30, 2021 totaled $1.3 million and were primarily included in general and administrative expenses and exploration expenses in the consolidated statements of loss.

Business Overview

We are a United States domiciled company that combines advanced mineral exploration technologies with electric metals exploration projects predominantly located in the United States.

We use our accurate and powerful Typhoon™ geophysical surveying system, together with advanced data analytics provided by our 94.3% owned subsidiary, Computational Geosciences Inc.

(“CGI”), to accelerate and de-risk the mineral exploration process as we seek to discover new deposits of critical metals that may otherwise be undetectable by traditional exploration technologies.

We believe the United States is significantly underexplored and has the potential to yield major new discoveries of critical metals.

Our mineral exploration efforts focus on copper as well as other metals including nickel, vanadium, cobalt, platinum group elements, gold and silver.

Through the advancement of our portfolio of electric metals exploration projects, headlined by the Santa Cruz Project in Arizona and the Tintic Project in Utah, as well as other exploration projects in the United States, we intend to support the United States' supply chain independence by finding and delivering critical metals necessary for the electrification of the economy.

We also operate a 50/50 joint venture with Saudi Arabian Mining Company Ma’aden ("Ma'aden") to explore for minerals on ~48,500 km 2 of underexplored Arabian Shield in Saudi Arabia.

Finally, in addition to our mineral projects, we also own a 90.0% controlling interest in VRB Energy Inc.

("VRB") which is primarily engaged in the design, manufacture, installation, and operation of vanadium redox flow energy storage systems.

At our Santa Cruz Project in Arizona, we are evaluating the potential for a high-grade modern underground copper mining operation.

In September 2023, we completed the Initial Assessment & Technical Report Summary for the Santa Cruz Project (the "IA"), which outlines a potential 5.9 million tonnes per year underground mining operation, supported by 105.2 million tonnes of modeled mill feed with an average grade of 1.58% copper from the Santa Cruz and East Ridge Deposits, resulting in an estimated 20-year mine life.

We are advancing further studies for an underground copper mining operation with a focus on minimizing the surface footprint of the mine while at the same time incorporating leading technologies to improve efficiencies and costs.

We are designing a technologically advanced mine that we expect to result in low carbon dioxide emissions per pound of copper produced and be a leading example of responsibly produced domestic copper.

Key considerations that will influence our decision making include, but are not limited to, using clean and renewable energy in our future mining operations, optimizing and minimizing our water utilization, minimizing our environmental footprint, ensuring workforce diversity and hiring from local communities, health, safety and environmental performance, support of local cultural heritage and biodiversity protection.

References to 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 project.

Our shares of common stock are listed on the NYSE American and the TSX under the ticker symbol “IE”.

Reverse Stock Split

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All references to common stock, options to purchase common stock, per share data and related information have been retrospectively adjusted to reflect the effect of the Reverse Stock Split for all periods presented.

Initial Public Offering

On June 30, 2022, we completed an initial public offering of 14,388,000 shares of our 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 TSX under the ticker symbol “IE”.

Business Overview

We are a United States domiciled minerals exploration and development company with a focus on developing mines from mineral deposits principally located in the United States in order to support American supply chain independence and to deliver the critical metals necessary for electrification of the economy.

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

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

“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 material mineral projects are 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.

Our other key mineral projects are the Hog Heaven Project, located in Montana (the “Hog Heaven Project”), and the Ivory Coast Project located in West Africa, which is held through our 22.8% 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:

As of December 31, 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 December 31, 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.

CGI offers mineral prospectivity and drill target identification services, data analytic tools and optimization of operational processes.

CGI provides fee-for-service and licensing agreements for one-off technology applications to customers in the area of critical minerals, energy and water exploration.

Impact of the COVID-19 Pandemic

The COVID-19 global pandemic has caused governments worldwide to implement measures to slow the spread of the outbreak through quarantines, travel restrictions, business shutdowns, and other measures.

The COVID-19 pandemic has negatively affected the global economy, disrupted financial markets and international trade, resulted in increased unemployment levels and significantly affected global supply chains, all of which have and are expected to continue to affect our future exploration activities and business.

To the extent the COVID-19 pandemic adversely affects our business prospects, financial condition, and results of operation, it may also have the effect of exacerbating many of the other risks described in the Item 1A.

Risk Factors section.

Risk Factors for a further discussion of the potential adverse impact of COVID-19 on our business, results of operations, and financial condition.

Business Developments in the Year

On May 15, 2023, we signed a Common Stock Subscription Agreement ("the Subscription Agreement") with Ma’aden.

On July 6, 2023, we completed the closing of the transactions contemplated by the Subscription Agreement (the

“Ma’aden Transactions”) and entered into an investor rights agreement, a shareholders’ agreement and the other instruments contemplated thereby.

The Ma'aden Transactions included the establishment of a 50/50 exploration joint venture between Ma’aden and Ivanhoe Electric to explore for minerals on ~48,500 km 2 of underexplored Arabian Shield in Saudi Arabia, and a strategic investment by Ma'aden in Ivanhoe Electric common stock.

On July 6, 2023, we issued to Ma’aden an aggregate of 10,269,604 shares of common stock of our Company, constituting 9.9% of the total outstanding number of shares of common stock immediately following closing of the Ma'aden Transactions, for gross proceeds of approximately $127.1 million, representing an aggregate purchase price of $12.38 per share.

Of the $127.1 million total proceeds from the private placement, $66.0 million has been contributed to the joint venture to fund its exploration activities, including the purchase of three new-generation Typhoon TM machines from I-Pulse Inc.

The remaining $61.1 million has been retained by Ivanhoe Electric to advance our portfolio of US mineral projects, and for working capital and general corporate purposes.

On July 10, 2023, we filed an automatic shelf registration statement on Form S-3 to permits us to publicly offer and sell securities from time to time, including common stock, preferred stock, debt securities, warrants, subscription rights and units.

We may offer and sell securities under the Form S-3 from time to time.

On September 6, 2023, we completed and announced the IA.

The IA is a preliminary technical and economic study for the Santa Cruz Project and associated high-grade mineral resources included in the Santa Cruz and East Ridge deposits.

The study analyzes the potential for a high-grade underground copper mining operation supported by modern technologies to reduce environmental impact and powered predominantly by renewable energy.

On September 18, 2023, we closed an underwritten public offering consisting of 11,851,852 shares of our common stock at a public offering price of $13.50 per share.

The aggregate gross proceeds to the Company from the offering were approximately $160 million, before deducting underwriting discounts and commissions and estimated offering expenses payable by the Company.

In addition, we received notice from the underwriters on September 18, 2023, of the full exercise of their option to purchase an additional 1,777,777 shares of common stock from the Company.

The aggregate gross proceeds from the exercise of the underwriters’ option was approximately $24 million, before deducting underwriting discounts and commissions and estimated offering expenses payable by the Company.

The sale of the underwriters’ option shares closed on September 21, 2023.

On October 23, 2023, we entered into a subscription agreement with Ma’aden whereby Ma’aden agreed to purchase 1,513,650 shares of our common stock at a purchase price of $13.50 per share in a private placement, for aggregate gross proceeds of approximately $20.4 million.

The subscription agreement is as a result of the "top-up right” granted to Ma'aden under the July 6, 2023 investor rights agreement which enables Ma'aden to purchase additional shares of our common stock to maintain its 9.9% stock ownership position in the event of any issuances.

The sale of the shares closed on October 31, 2023.

Selected Financial Information

The selected financial information set forth below is presented in accordance with U.S.

GAAP and is derived from our audited consolidated and combined carve-out financial statements for the years ended December 31, 2022 and 2021.

GAAP and is derived from our audited consolidated financial statements for the years ended December 31, 2023 and 2022.

We did not declare or pay any dividends or distributions in any financial reporting period.

(In thousands, except per share amounts) Year Ended

December 31, 2022 Year Ended December 31, 2021

December 31, 2023 Year Ended

December 31, 2022

Revenue $ 3,903 $ 8,440

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Revenue, Cost of Sales and Gross Profit

We generate revenue from our technology businesses CGI and VRB, which are included in the data processing and energy storage systems business segments, respectively.

We have not generated any revenue from our mining projects because they are in the exploration stage.

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

For the years ended December 31, 2022 and 2021, the majority of our revenue came from CGI’s sale of data processing services to the mining and oil and gas industries, which included amounts from a customer under a three-year contract that covered the period from August 2018 to August 2021.

Revenue from this customer represented 82%, and 74% of sales for the years ended December 31, 2022 and 2021.

During the fourth quarter of 2021, CGI entered into a new agreement with this customer whereby it 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.

The agreement also provided for $0.5 million of service fees payable in two installments, one in the first quarter of 2022 and one in the first quarter of 2023.

This agreement resulted in $6.9 million of revenue from this customer being recognized in the year ended December 31, 2022.

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

We also generate revenue from VRB, which develops, manufactures and sells energy storage systems.

(In thousands) Year Ended

December 31, 2022 Year Ended December 31, 2021

Software licensing and data processing services $ 7,729 $ 4,512

Energy storage systems 711 140

Total $ 8,440 $ 4,652

Cost of sales:

Software licensing and data processing services $ 577 $ 1,427

Energy storage systems 2,558 93

Total $ 3,135 $ 1,520

Gross profit:

Software licensing and data processing services $ 7,152 $ 3,085

Energy storage systems (1,847) 47

Total $ 5,305 $ 3,132

We generate some revenue from our technology businesses CGI and VRB, which are included in the data processing and energy storage systems business segments, respectively.

CGI generates revenue comes from the sale of data processing services to the mining and oil and gas industries.

In prior years, CGI has also generated revenue from software licensing.

VRB generates revenue from developing, manufacturing and selling vanadium redox flow energy storage systems.

Exploration Expenses

Exploration expenses include topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling and activities in relation to identifying a mineral resource and then evaluating the technical feasibility and commercial viability of extracting the mineral resource, as well as value-added taxes in relation to these direct exploration and evaluation costs incurred in foreign jurisdictions where recoverability of those taxes is uncertain.

Exploration expenses also include salaries, benefits and stock-based compensation expenses of the employees performing these activities.

Exploration expenses also include salaries, benefits and non-cash stock-based compensation expenses of the employees performing these activities.

Exploration expenses also include payments under earn-in and option agreements where the option right is with respect to ownership interests in legal entities owning the underlying mineral project in the exploration project phase.

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 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.

During 2021, Cordoba’s San Matias project accounted for a significant portion of our exploration expenses.

In 2022, expenditures at our Santa Cruz Project accounted for the majority of exploration expenses which are expected to continue to be significant as we advance the project with proceeds from our initial public offering.

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.

Included in exploration expenses are exploration costs that we incur in relation to generating new projects.

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These are categorized as “Project generation and other”.

General and Administrative Expenses

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

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

In particular, we incurred increased general and administrative expenses costs in 2023 compared to 2022 for salaries, non-cash stock-based compensation, compliance related costs and directors’ and officers’ insurance expense.

Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

For the year ended December 31, 2023 we recorded a net loss attributable to common stockholders of $199.4 million ($1.95 per share), compared to $149.8 million ($1.91 per share) for the year ended December 31, 2022, which was an increase of $49.6 million.

Significant contributors to this increase in the year ended December 31, 2023 included an increase of $21.4 million in exploration expenditures, an increase of $21.2 million in general and administrative expenses, an increase of $32.2 million in share of loss of equity method investees, a decrease of $4.5 million in revenue compared to the year ended December 31, 2022 offset by a decrease of $19.0 million in non-cash loss on revaluation of convertible debt as compared to the year ended December 31, 2022.

Exploration expenses were $126.7 million for the year ended December 31, 2023 an increase of $21.4 million from $105.3 million for the year ended December 31, 2022.

Exploration expenses consisted of the following:

(In thousands) Year Ended

December 31, 2022 Year Ended December 31, 2021

December 31, 2023 Year Ended

December 31, 2022

Exploration Expenses:

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San Matias, Colombia 28,068 18,454

Pinaya, Peru 2,616 1,774

Tintic, USA 13,131 2,282

Hog Heaven, USA 7,812 2,216

Yangayu, Papua New Guinea 2,128 497

Perseverance, USA 1,785 742

Carolina, USA 1,307 —

Lincoln, USA 3,684 1,312

Bitter Creek, USA 644 340

Ivory Coast Project, Ivory Coast 70 1,931

White Hill, USA 1,451 —

Carolina, USA 1,337 1,307

Pinaya, Peru 958 2,616

Project generation and other 13,075 15,927

Total $ 126,719 $ 105,286

General and Administrative Expenses

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

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

We expect higher costs related to salaries, benefits, stock-based 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

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 acquired in 2018.

VRB also conducts research and development activities to continue to advance its energy storage system technology.

We expect research and development expenses to increase as our technology-based businesses continue to grow.

(In thousands) Year Ended

December 31, 2022 Year Ended December 31, 2021

Research and development expenses:

Software licensing and data processing services $ 3,342 $ 2,606

Energy storage systems 1,453 1,031

Other 245 188

Total $ 5,040 $ 3,825

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

For the year ended December 31, 2022 we recorded a net loss attributable to common stockholders of $149.8 million ($1.91 per share), compared to $59.3 million ($0.96 per share) for the year ended December 31, 2021, which was an increase of $90.5 million.

Significant contributors to this increase in the year ended December 31, 2022 included an increase of $65.8 million in exploration expenditures, an increase of $14.4 million in non-cash loss on revaluation of

convertible debt and an increase of $6.6 million in general and administrative expenses, offset by an increase of $3.8 million in revenue compared to the year ended December 31, 2021.

Exploration expenses were $105.3 million for the year ended December 31, 2022 an increase of $65.8 million from $39.5 million for the year ended December 31, 2021.

During the year ended December 31, 2023, expenditures largely focused on exploration activities at:

• the Santa Cruz Project where $57.2 million of exploration expenditure was incurred in the year ended December 31, 2023 compared to $61.2 million incurred in the year ended December 31, 2022.

Activities during the year ended December 31, 2022 at Santa Cruz were focused on a program of exploration and infill resource, geotechnical, hydrological and metallurgical drilling, advancing technical studies along with completing an Updated Mineral Resource estimate for the Santa Cruz Copper Project.

In addition, a 26.5 km2 (6,500 acre) Typhoon™ 3D IP survey that was completed in July 2022.

Included in the $61.2 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, this agreement was terminated by the Company.

• the San Matias Project where $18.5 million of exploration expenditure was incurred by Cordoba Minerals in the year ended December 31, 2022 focused on the commencement of a Feasibility Study on the Alacran deposit in May 2022.

A total 40,000-metre infill diamond drilling campaign is planned.The 25,000-metre initial phase drill program focused on the central area of the Alacran Deposit was completed during the fourth quarter of 2022.

• the Pinaya Project where $2.6 million of exploration expenditure was incurred by Kaizen Discovery in the year ended December 31, 2022.

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

Activities during the year ended December 31, 2023, at Santa Cruz were focused on a program of exploration and infill resource, geotechnical, hydrological and metallurgical drilling, advancing technical studies, completing the updated mineral resource estimate released in February 2023 and the finalization of the IA and the National Instrument 43-101 Preliminary Assessment and Technical Report ("PEA") which were released on September 6, and September 11, 2023.

• the San Matias Project where $28.1 million of exploration expenditure was incurred by Cordoba in the year ended December 31, 2023 compared to $18.5 million in the year ended December 31, 2022.

Activities during the year ended December 31, 2023, focused on continuing work on the National Instrument 43-101 feasibility study on the Alacran deposit which was completed in December 2023.

Activities during the year ended December 31, 2023, included infill geotechnical, metallurgical, hydrological and infill resource drilling, feasibility metallurgical test work, infrastructure, mine, mill and tailings facility design work, investigation of power supply options, environmental studies and market investigations;

• the Tintic Project where $13.1 million of exploration expenditure was incurred in the year ended December 31, 2023 compared to $2.3 million in the year ended December 31, 2022.

Activities during the year ended December 31, 2023 at Tintic were focused on completing an initial diamond drill hole and commencing a two drill rig exploration program that is testing new areas of the historic Main Tintic Mining District.

Drilling has focused on deep targets guided by geophysical data;

• the Hog Heaven Project in Montana where $7.8 million of exploration expenditure was incurred in the year ended December 31, 2023 compared to $2.2 million in the year ended December 31, 2022.

Activities during the year ended December 31, 2023 at Hog Heaven included a drilling program that commenced in June 2023.

The ongoing drill program is designed to search for additional silver, gold, and copper-rich high-sulfidation epithermal mineralization, which was the focus of historical mining activities and is also intended to search for porphyry copper mineralization at depth.

During 2023, we completed 12 drill holes, totaling 10,905 meters.

In November 2023, we conducted a Typhoon TM geophysical survey covering approximately 10 km 2 of land.

General and administrative expenses were $48.2 million for the year ended December 31, 2023, an increase of $21.2 million from $27.0 million in the year ended December 31, 2022.

Several items contributed to the increase, including:

• a $3.4 million increase in directors and officers insurance expenses during the year ended December 31, 2022 in relation to the new director and officers insurance policy we entered into when we became a public company in June 2022.

There was no similar expense in the prior year;

• a $1.1 million increase in stock-based compensation expense due to Ivanhoe Electric stock option and RSU grants in November 2022;

• a $1.1 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;

• a $0.9 million increase in administration expenses at Cordoba Minerals due to increased professional fees related to costs incurred related to entering into the strategic arrangement for the Alacran Project with JCHX.

• a $15.0 million increase in non-cash stock-based compensation expense from $2.0 million for the year ended December 31, 2022 to $17.0 million for the year ended December 31, 2023 primarily due to Ivanhoe Electric stock option and RSU grants that have occurred from November 2022 onwards.

• a $1.9 million increase in directors and officers insurance expenses from $3.4 million for the year ended December 31, 2022 to $5.3 million for the year ended December 31, 2023 in relation to the director and officers insurance policy that we entered into when we became a public company in June 2022;

• a $1.9 million increase in salary and wages from $2.0 million for the year ended December 31, 2022 to $4.7 million for the year ended December 31, 2023 due to adding more people to our management and administrative teams following our IPO in June 2022.

During the year ended December 31, 2023, we recorded $36.0 million share of loss of equity method investees which was an increase of $32.2 million from the $3.7 million share of loss of equity method investee recorded for the year ended December 31, 2022.

The $36.0 million share of loss of equity method investees is largely attributable to our recognition of a $34.4 million loss from our 50% share of the loss from the Ma'aden joint venture due to the land access rights of $66.0 million being expensed in accordance with our accounting policy for exploration and evaluation costs.

During the year ended December 31, 2022, we recorded a non-cash $19.0 million loss on revaluation of convertible debt which related to the convertible notes that were automatically converted into shares of common stock upon the completion of our initial public offering on June 30, 2022.

Revenue for the year ended December 31, 2022 was $8.4 million, an increase of $3.8 million from $4.7 million for the year ended December 31, 2021.

December 31, 2022 Year Ended December 31, 2021 Percentage change

There was no similar expense in 2023.

Revenue for the year ended December 31, 2023 was $3.9 million, a decrease of $4.5 million from $8.4 million for the year ended December 31, 2022.

December 31, 2023 Year Ended

December 31, 2022 Percentage change

year-over-year

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Cost of sales (2,489) (2,558) (3) %

Gross (loss) profit (1,847) 47 -4028 %

Gross profit (loss) 114 (1,847) 106 %

Revenue $ 3,903 $ 8,440 (54) %

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CGI’s software licensing and data processing services to the mining and oil and gas industries represented 33% of our revenue for the year ended December 31, 2023 ($1.3 million) and 92% for the year ended December 31, 2022 ($7.7 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.

The agreement also provided for $0.5 million of service fees payable in two installments, one in the first quarter of 2022 and one in the first quarter of 2023.

This agreement resulted in $6.9 million of revenue from this customer being recognized in the year ended December 31, 2022.

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 year ended December 31, 2022 was $7.2 million, a $4.1 million or 132% increase from $3.1 million for the year ended December 31, 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.

The decrease of $6.4 million in CGI’s revenue from 2023 to 2022 was a direct result of the year ended December 31, 2022 including revenue from a customer who licensed certain software from CGI for a one-time fee of $6.5 million.

There were no similar agreements in 2023 and we cannot provide any assurance that CGI will enter into any similar contracts in the future.

CGI’s gross profit for the year ended December 31, 2023 was $0.8 million, a $6.3 million or 89% decrease from $7.2 million for the year ended December 31, 2022.

The 2022 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 for the year ended December 31, 2022.

VRB’s energy storage system revenue represented 67% of our revenue for the year ended December 31, 2023 ($2.6 million) and 8% for the year ended December 31, 2022 ($0.7 million).

During the year ended December 31, 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.

VRB had a gross loss for the year ended December 31, 2022 of $1.8 million largely due to an inventory impairment of $1.9 million being recognized in relation to the termination of a tolling agreement with a producer of ammonium metavanadate.

Research and development expenses for the year ended December 31, 2022 were $5.0 million, an increase of $1.2 million from the same period in 2021 attributable to a $0.7 million an increase in research and development activity at CGI and a $0.4 million an 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.

During the year ended December 31, 2023, VRB delivered, installed and commissioned energy storage systems of 2.18MW/6.25MWh to customers, which resulted in $2.6 million of revenue being recognized.

VRB’s gross profit for the year ended December 31, 2023 was $0.1 million, a $2.0 million or 106% increase from the $1.8 million gross loss for the year ended December 31, 2022.

VRB’s gross loss for the year ended December 31, 2022 was largely due to an inventory impairment of $1.9 million being recognized in relation to the termination of a tolling agreement with a producer of ammonium metavanadate.

Research and development expenses for the year ended December 31, 2023 were $6.1 million, an increase of $1.1 million from the same period in 2022.

The increase is primarily attributable to incurring $2.9 million of Typhoon related research and development activities for the year ended December 31, 2023 compared to $0.2 million for the year ended December 31, 2022.

In 2023, we commenced design and development activities for our next generation of Typhoon TM equipment.

Stock-Based Compensation

In November 2022, we granted 2,760,509 stock options at an exercise price of $11.75 per share to certain directors, officers and employees.

The fair value of the option grant was determined using the Black-Scholes option-pricing model as $5.08 per share.

Also in November 2022, we granted 750,000 RSU’s to our incoming CEO which had a fair value on the grant date of $9.98 per share.

During the year ended December 31, 2023, we granted stock options to certain employees of the Company.

The fair value of the option grants was determined using the Black-Scholes option-pricing model as follows:

February 1, 2023 Grant Date March 1, 2023 Grant Date July 1, 2023 Grant Date August 9, 2023 Grant Date December 1, 2023 Grant Date

Number of options granted 500,000 100,000 100,000 200,000 50,000

Exercise price $13.23 $15.46 $13.04 $16.03 $11.75

Black-Scholes option-pricing model fair value $7.22 $8.53 $6.95 $8.46 $5.96

In addition, in January 2023, we granted 750,000 RSUs to a new senior officer of the Company which had a fair value on the grant date of $12.15 per share.

Liquidity, Capital Resources and Capital Requirements

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We have funded our operations primarily through the sale of our equity and convertible securities.

We raised funds between August 3, 2021 and November 17, 2021 by selling shares and unsecured convertible promissory notes (the “Series 1 Convertible Notes”) for gross proceeds of $60.0 million.

In addition, on April 5, 2022, we raised funds by selling $86.2 million aggregate principal amount of unsecured convertible promissory notes (the “Series 2 Convertible Notes”) for gross proceeds of $86.2 million.

On June 30, 2022, we closed our initial public offering of 14,388,000 shares of our common stock at a price of $11.75 per share.

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 December 31, 2023, and 2022, we had cash and cash equivalents of $205.0 million and $139.7 million, respectively, and a working capital of $176.8 million and $133.6 million, respectively.

Of the total cash and cash equivalents at December 31, 2023, and December 31, 2022, $15.0 million and $20.7 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.

As at February 26, 2024, we believe that we will have sufficient cash resources to carry out our business plans for at least the next 12 months, after which we expect to need additional financing to further advance our projects and conduct our business.

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 or we may need to curtail currently planned exploration activities.

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

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Business — Mineral Project Obligations and Payments.

We may seek additional financing at any time through debt, equity, project specific debt, and/or other means.

Our continued operations are dependent on our ability to obtain additional financing or to generate future cash flows.

However, there can be no assurance that we will be successful in our efforts to raise additional capital on terms favorable to us, or at all.

Cash Balances as of December 31, 2023

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USA $ 189,081 $ 188 $ — $ — $ — $ 189,269

Colombia — — — 7,524 — 7,524

Cayman Islands 7,606 4 — — — 7,609

Singapore 6,609 — — — — 6,609

Canada 2,905 475 — — — 3,380

Colombia — — — 3,233 — 3,233

China — — 930 — — 930

Cayman Islands 806 2 — — — 807

British Virgin Islands 683 2 — — — 685

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There were no cash transfers to or from our PRC subsidiaries in the form of intercompany loans during the years ended December 31, 2023 and 2022.

Refer to Note 18 of our consolidated and combined carve-out financial statements which outlines other restrictions on transfers of net assets from our consolidated subsidiaries to the Company.

Refer to Note 17 of our consolidated financial statements which outlines other restrictions on transfers of net assets from our consolidated subsidiaries to the Company.

In May 2023, as part of the consideration for the acquisition of 5,975 acres of surface title and associated water rights at the Santa Cruz Project we issued to the vendor a secured promissory note in the principal amount of $82.6 million.

The promissory note included an annual interest rate of prime plus 1% and is to be paid in installments, In November 2023, Ivanhoe Electric repaid $34.3 million, plus accrued interest of the promissory note.

Four equal principal payments of $12.1 million remain to be paid on the first, second, third and fourth anniversaries of the November 2023 payment, plus applicable accrued interest.

Convertible Bond — VRB.

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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 will be automatically converted into equity of VRB upon an equity financing or sale event, at a price per share equal to the lower of (A) the transaction price of the equity financing or sale event, and (B) the valuation cap price of $158.0 million divided by the total shares outstanding at the time of the event.

Prior to the maturity date, the convertible bond will be automatically

converted into equity of VRB upon an equity financing or sale event, at a price per share equal to the lower of (A) the transaction price of the equity financing or sale event, and (B) 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.

Bridge Loan — Cordoba Minerals.

In December 2022, JCHX advanced a bridge loan of $10 million to Cordoba Minerals in connection with the strategic arrangement for the joint development of Cordoba Mineral’s Alacran Project.

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, calculated on the basis of a 365-day year.

Upon closing the strategic arrangement, all of the principal and interest outstanding on the bridge loan will be applied towards the first installment as a payment in kind.

The transaction agreements do not become effective until JCHX obtains shareholder approval, which is expected to be completed in the second quarter of 2023.

Bridge Loan — Cordoba.

In November 2023, JCHX advanced a short-term loan of $4 million to Cordoba in connection with the strategic arrangement for the joint development of Cordoba’s Alacran Project.

The short-term loan bears simple interest at 12% per annum which is payable on its maturity date, which is the earlier of (i) 12 months after the date of the loan agreement, and (ii) the date the second installment of $40 million becomes payable by JCHX under the $100 million strategic arrangement.

If the maturity date occurs as the date of the second installment, the outstanding amount under the Loan may be deducted from the second installment.

In early January 2024, the $4 million loan was fully settled.

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

(In thousands) Year Ended

December 31, 2022 Year Ended December 31, 2021

December 31, 2023 Year Ended

December 31, 2022

Net cash (used in) provided by:

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We do not generate adequate cash from operations to cover our operating expenses and therefore rely on our financing activities to provide the cash resources to fund our operating and investing activities.

Net cash used in operating activities for the year ended December 31, 2022 was $115.7 million, a decrease of $67.9 million from the $47.8 million of net cash used for the year ended December 31, 2021.

Net cash used in operating activities for the year ended December 31, 2023 was $150.5 million, an increase of $34.8 million from the $115.7 million of net cash used for the year ended December 31, 2022.

Investing activities.

Our investing activities generally relate to acquisitions of mineral property interests, purchases of public company shares in companies that we may partner with and capital expenditures at our projects.

Our investing activities generally relate to acquisitions of mineral property interests, purchases of shares in companies that we may partner with and capital expenditures at our projects.

To date, due to our mining projects being in the exploration stage we have not incurred material capital expenditures.

Net cash used in investing activities for the year ended December 31, 2022 of $48.4 million was mainly attributable to $35.9 million for payments for mineral interests and $8.5 million for payments for property, plant and equipment.

The $35.9 million of cash used for purchases of mineral interests related to $28.0 million for the Santa Cruz Project and $7.6 million of payments for the Tintic Project.

The $8.5 million for payments for property, plant and equipment largely relates to a $7.1 million deposit made to I-Pulse for the purchase of six Typhoon™ transmitters to be delivered in stages over approximately the next three years.

Net cash used in investing activities for the year ended December 31, 2021 of $22.6 million was largely attributable to $14.4 million for payments for mineral interests, $3.1 million of payments for intangible assets and $1.6 million for shares

of Brixton Metals.

The $14.4 million of cash used for purchases of mineral interests related to $8.5 million of payments related to the Santa Cruz Project and $5.7 million of payments for the Tintic Project.

Net cash used in investing activities for the year ended December 31, 2023 of $150.8 million was mainly attributable to $80.5 million related to acquisitions of exploration properties and $68.7 million for purchases of investments subject to significant influence.

The $80.5 million of payments for mineral interests included $76.6 million paid to acquire land at the Santa Cruz Project and $3.5 million of option payments at our Tintic Project.

The $68.7 million for purchases of investments subject to significant influence primarily consists of our $66.0 million investment in the Ma'aden Joint Venture.

Financing activities.

During the year ended December 31, 2023 there was $366.5 million of net cash provided by financing activities which was primarily from the $319.6 million in net proceeds we raised through issuances our common stock.

We raised net proceeds of $123.7 million as a result of the July 2023 private placement with Ma'aden and raised net proceeds of $175.5 million from our September 2023 public offering.

In October 2023, we received approximately $20.0 million from Ma’aden exercising their “top-up right” to maintain their 9.9% interest.

In addition, we received $3.4 million of proceeds from the exercise of employee stock options during the year ended December 31, 2023.

Our subsidiary, Cordoba, raised $39.5 million during the year ended December 31, 2023 in relation to financing its Alacran project through its strategic arrangement with JCHX.

During the year ended December 31, 2022, there was $254.4 million of net cash provided by financing activities representing the $158.1 million of net cash raised upon the closing of our initial public offering on June 30, 2022, and $86.2 million raised from the sale of the Series 2 Convertible Notes.

In addition, Cordoba Minerals, received a $10.0 million bridge loan from JCHX in connection with the strategic arrangement for the joint development of the Alacran Project.

During the year ended December 31, 2021, cash provided by financing activities was $111.0 million.

The sources of cash included $60.0 million that the Company raised from the sale of shares of common stock and Series 1 Convertible Notes.

Our subsidiaries also raised funds during the period.

VRB raised $24 million through the issuance of a convertible bond and Cordoba and Kaizen completed equity financings and raised external funds totaling $5.3 million.

From January to April 2021, the Company’s activities were funded by HPX as they were prior to the April 2021 reorganization.

Contractual Obligations

As of December 31, 2022, we had the following material contractual obligations in addition to our discretionary mineral project obligations described above:

Payments due by period (in thousands)

Total Less than

1-3 years 4-5 years More than

In addition, Cordoba, received a $10.0 million bridge loan from JCHX in connection with the strategic arrangement for the joint development of the Alacran Project.

Material Cash Obligations

As of December 31, 2023, we had the following material known cash obligations in addition to our discretionary mineral project obligations described above:

Material Cash Obligations (in thousands)

Total 2024 2025-2026 2027-2028 2029 onwards

Note payable (1)

$ 48,324 $ 12,081 $ 24,162 $ 12,081 $ —

Long-term debt obligations (2)

24,000 — 24,000 — —

Leases 1,223 783 440 — —

Mineral property obligations (non-discretionary) 5,245 4,325 920 — —

Typhoon purchase obligations 6,010 4,153 1,857 — —

Other long-term contractual liabilities (2)

Loan from related party (3)

4,000 4,000 — — —

Total contractual obligations $ 47,572 $ 5,799 $ 17,773 $ 24,000 $ —

(1) Long-term obligations include the $10.0 million bridge loan provided by JCHX to Cordoba Minerals and the $24.0 million convertible bond issued by VRB that matures in 2026 if not converted to common shares of VRB prior to such date.

Total material cash obligations $ 82,332 $ 20,233 $ 50,018 $ 12,081 $ —

(1) The promissory note was issued as part of the consideration for the acquisition of certain land for the Santa Cruz Project.

Four equal principal payments of $12.1 million remain to be paid on the first, second, third and fourth anniversaries of November 2023, plus applicable accrued interest .

(2) The $24.0 million convertible bond issued by VRB that matures in 2026 if not converted to common shares of VRB prior to such date.

As of December 31, 2023, the value of the convertible bond including accrued interest was $28.4 million.

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

(3) JCHX advanced a short-term loan of $4 million to Cordoba in connection with the strategic arrangement for the joint development of Cordoba’s Alacran Project.

The loan was fully repaid in January 2024.

Off Balance Sheet Arrangements

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Related Party Transactions

See Note 20 of our consolidated and combined carve-out financial statements for the years ended December 31, 2022 and 2021.

See Note 19 of our consolidated financial statements for the years ended December 31, 2023 and 2022.

Critical Accounting Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated and combined carve-out financial statements which have been prepared in accordance with U.S.

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements which have been prepared in accordance with U.S.

The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the disclosure of contingent assets and liabilities as of the date of our financial statements.

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Actual results may vary from our estimates in amounts that may be material to the financial statements.

reasonably could have been used or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our financial statements.

An accounting estimate is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our financial statements.

We base our assumptions and estimates on historical experience and various other sources that we believe to be reasonable under the circumstances.

Actual results may differ from the estimates we calculate due to changes in circumstances, global economics and politics and general business conditions.

A summary of our significant accounting policies is detailed in Note 3 to our consolidated and combined carve-out financial statements included in this Annual Report.

A summary of our significant accounting policies are detailed in Note 2 to our consolidated financial statements included in this Annual Report.

We have outlined below those policies identified as being critical to the understanding of our business and results of operations and that require the application of significant management judgment in developing estimates.

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The use of the Black-Scholes option pricing model requires input estimation of the expected life of the option and volatility, which can have a significant impact on the valuation model and resulting expense recorded.

In November 2022, we granted 2,760,509 stock options at an exercise price of $11.75 per share to certain officers and employees.

The fair value of the option grant was determined using the Black-Scholes option-pricing model as $5.08 per share.

The following assumptions were used to compute the fair value of the options granted:

We granted 950,000 stock options during the year ended December 31, 2023.

The table below details the options granted and the Black-Scholes option pricing model assumptions used to compute the fair value of the options:

February 1, 2023 Grant Date March 1, 2023 Grant Date July 1, 2023 Grant Date August 9, 2023 Grant Date November 1, 2023 Grant Date

Number of options granted 500,000 100,000 100,000 200,000 50,000

Exercise price $13.23 $15.46 $13.04 $16.03 $11.75

Black-Scholes option-pricing model fair value $7.22 $8.53 $6.95 $8.46 $5.96

Black-Scholes option-pricing model assumptions:

Risk-free interest rate 3.7% 4.5% 4.4% 4.4% 4.2%

Dividend yield nil

Dividend yield nil nil nil nil nil

Estimated volatility 69.8% 69.5% 66.2% 65.4% 64.7%

Expected option life 4 years

Expected option life 4 years 4 years 4 years 4 years 4 years

The risk-free interest rate assumption was based on the U.S.

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As a result, we consider whether it is more likely than not that all or a portion of such assets will be realized during periods when they are available, and if not, we provide a valuation allowance for amounts not likely to be recognized.

In determining our valuation

allowance, we have not assumed future taxable income from sources other than the reversal of existing temporary differences.

In determining our valuation allowance, we have not assumed future taxable income from sources other than the reversal of existing temporary differences.

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 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.

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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We had no uncertain tax positions as of December 31, 2023.

Emerging Growth Company Status

We are an “emerging growth company”, as defined in the JOBS Act.

The JOBS Act exempts emerging growth companies from being required to comply with new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.

We have elected not to opt out of this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.

As a result, our consolidated and combined carve-out financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

The accounting policies applied in our consolidated and combined carve-out financial statements included elsewhere in this Annual Report reflect the early adoption of certain accounting standards as the JOBS Act does not preclude an emerging growth company from early adopting a new or revised accounting standard to the extent early adoption is allowed by the accounting standard.

Quantitative and Qualitative Disclosures About Market Risk

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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-K

Item 7. Management’s Discussion and Analysis