What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-02-26 compared with 2023-03-14 · 393 added, 364 removed, 807 unchanged (48% of the section changed)

4 unchanged sentences

We have audited the accompanying consolidated balance sheets of Ivanhoe Electric Inc.

and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated and combined carve-out statements of loss and comprehensive loss, changes in equity, and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of loss and comprehensive loss, changes in equity, and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

1 unchanged sentence

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

1 unchanged sentence

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

2 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Ma’aden Joint Venture — Refer to Notes 6 to the financial statements

Critical Audit Matter Description

On July 6, 2023, the Company closed an agreement with Saudi Arabian Mining Company Ma’aden (“Ma’aden”) and entered into an Investor Rights Agreement, a Shareholders’ Agreement, and other instruments contemplated thereby.

This included the establishment of a 50/50 exploration joint venture between Ma’aden and the Company to explore prospective land in Saudi Arabia, for which the Company contributed funds and Ma’aden contributed access to land to be used for conducting the exploration activities of the joint venture.

To determine the accounting treatment of the joint venture management was required to make judgments and as such, auditing the accounting treatment required complex analysis and consideration which resulted in an increased extent of audit effort, including the need to involve technical accounting specialists.

How the Critical Audit Matter Was Addressed in the Audit

With the assistance of technical accounting specialists, our audit procedures related to management’s determination of the accounting treatment of the joint venture included the following, among others:

• Evaluated the effectiveness of controls over management’s determination of accounting treatment of the joint venture;

• Assessed the information in the agreements to evaluate that all relevant factors were analyzed;

• Evaluated management’s determination of the accounting treatment of the joint venture by analyzing specific facts and circumstances against relevant accounting guidance.

JCHX Transaction- Refer to Notes 16 to the financial statements

Critical Audit Matter Description

On May 8, 2023, the Company through its subsidiary Cordoba Minerals Corp (“Cordoba”) closed with JCHX Mining Management Co., Ltd (“JCHX") a $100 million strategic arrangement (the “JCHX Transaction”) for the joint-development of the Alacran Project in Colombia.

Upon closing, JCHX funded the initial installment towards its 50% ownership interest in CMH Colombia S.A.S.

(“CMH”), a company existing under the laws of Colombia, which owns 100% of the Alacran Project and is the joint venture vehicle for Cordoba and JCHX in this strategic project level partnership.

To determine the accounting treatment of the JCHX Transaction, management was required to make judgments and as such, auditing the accounting treatment required complex analysis and consideration which resulted in an increased extent of audit effort, including the need to involve technical accounting specialists.

How the Critical Audit Matter Was Addressed in the Audit

With the assistance of technical accounting specialists, our audit procedures related to management’s determination of the accounting treatment of the JCHX Transaction included the following, among others:

• Evaluated the effectiveness of controls over management’s determination of accounting treatment of the JCHX Transaction;

• Assessed the information in the JCHX Transaction agreements to evaluate that all relevant matters in the agreement have been considered;

• Evaluated management’s determination of the accounting treatment of the JCHX Transaction by analyzing specific facts and circumstances against relevant accounting guidanc e .

/s/ Deloitte LLP

Chartered Professional Accountants

Vancouver, Canada

March 14, 2023

Chartered Professional Accountants Vancouver, Canada

February 26, 2024

We have served as the Company's auditor since 2021

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Ivanhoe Electric Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Ivanhoe Electric Inc.

and subsidiaries (the “Company”) as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our report dated February 26, 2024, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte LLP

Chartered Professional Accountants Vancouver, Canada

February 26, 2024

IVANHOE ELECTRIC INC.

4 unchanged sentences

Cash and cash equivalents $ 205,043 $ 139,660

Accounts receivable 1,497 1,385

Accounts and other receivables 3,326 1,497

Inventory 5,013 5,648

4 unchanged sentences

Other investments 2,989 2,220

Exploration mineral interests 86,758 73,039

Exploration properties 216,290 86,758

Property, plant and equipment 6,645 3,934

5 unchanged sentences

Accounts payable and accrued liabilities $ 19,948 $ 13,943

Deferred consideration payable — 26,562

Lease liabilities 706 342

Note payable, current 12,672 —

Due to related party 4,000 —

Lease liabilities, current 699 706

Contract liability 2,404 2,783

1 unchanged sentence

Non-current liabilities:

Deferred income taxes 3,888 5,382

Note payable 36,244 —

Convertible debt 28,372 25,918

Deferred income taxes 4,845 3,888

Due to related party — 10,010

15 unchanged sentences

IVANHOE ELECTRIC INC.

CONSOLIDATED AND COMBINED CARVE-OUT

STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(Expressed in thousands of U.S.

12 unchanged sentences

Interest expense, net 2,960 972

Foreign exchange loss (gain) 1,327 ( 254 )

Share of loss of equity method investees 3,711 213

Foreign exchange (gain) loss ( 1,274 ) 1,327

Share of losses from significant influence investments 35,952 3,711

Loss on revaluation of investments 963 1,450

Loss on revaluation of convertible debt — 18,965

Other expenses, net 1,013 580

Other (income) expenses , net ( 2,344 ) 1,013

Loss before income taxes 216,659 159,603

Income taxes 618 484

Income taxes (recovery) ( 584 ) 618

Net loss 216,075 160,221

15 unchanged sentences

IVANHOE ELECTRIC INC.

CONSOLIDATED AND COMBINED CARVE-OUT STATEMENTS OF CHANGES IN EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of U.S.

1 unchanged sentence

Years ended December 31, 2023 and 2022

Common Stock Additional paid-in capital Net parent investment Accumulated deficit Accumulated other comprehensive income (loss) Non- controlling

Common Stock Additional paid-in capital Accumulated deficit Accumulated other comprehensive income (loss) Non- controlling

interest Total

3 unchanged sentences

Other comprehensive loss — — — — 313 247 560

Net transfer from parent — — — 29,140 — — — 29,140

Restructuring upon spin off (Note 1) 59,909,344 6 65,648 ( 65,654 ) — — — —

Issuance of common stock, net of issuance costs 14,388,000 2 158,048 — — — 158,050

Issuance of common stock upon conversion of debt 13,628,958 1 160,139 — — — 160,140

Issuance of common stock upon settlement of liability 945,626 — 11,111 — — — 11,111

Stock options exercised 72,666 — 181 — — — 181

Stock-based compensation — — 4,548 — — 285 4,833

3 unchanged sentences

Other comprehensive loss — — — — ( 884 ) ( 475 ) ( 1,359 )

Issuance of common stock, net of issuance costs 14,388,000 2 158,048 — — — — 158,050

Issuance of common stock upon conversion of debt 13,628,958 1 160,139 — — — — 160,140

Issuance of common stock upon settlement of liability 945,626 — 11,111 — — — — 11,111

Issuance of common stock;

public offering and subscription agreement, net of issuance costs 15,143,279 2 195,949 — — — 195,951

Issuance of common stock;

strategic investment, net of issuance costs 10,269,604 1 123,670 — — — 123,671

Issuance of common stock;

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

Stock options exercised 1,379,526 — 3,422 — — — 3,422

Settlement of restricted share units 250,000 — — — — — —

Settlement of deferred share units 11,990 — — — — — —

Stock-based compensation — — 20,738 — — 225 20,963

Non-controlling interests investment in subsidiary — — 24,258 — — 22,896 47,154

Other changes in non-controlling interests — — ( 54 ) — — 11 ( 43 )

1 unchanged sentence

IVANHOE ELECTRIC INC.

CONSOLIDATED AND COMBINED CARVE-OUT STATEMENTS OF CASH FLOWS

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of U.S.

6 unchanged sentences

Non-cash exploration expense 2,340 1,273

Non-cash research and development expense 941 —

Loss on de-recognition of mineral interest — 5,700

Interest expense 3,707 2,071

Unrealized foreign exchange (gain) loss ( 1,293 ) 1,332

Finance expense 2,071 1,405

Share of loss of equity method investees 3,711 213

Income taxes 618 495

Loss on revaluation of convertible debt 18,965 4,571

Share of losses from significant influence investments 35,952 3,711

Loss on revaluation of investments 963 1,450

Loss on write-down of inventory 1,932 —

Loss on revaluation of convertible debt — 18,965

Income taxes ( 583 ) 618

Other ( 1,330 ) 2,808

4 unchanged sentences

Accounts payable and accrued liabilities 1,879 2,727

Other ( 2,144 ) 1,013

Other operating assets and liabilities 1,634 ( 2,144 )

Net cash used in operating activities ( 150,515 ) ( 115,734 )

Investing activities

Purchase of mineral interests ( 35,905 ) ( 14,400 )

Purchase of exploration properties ( 80,507 ) ( 35,905 )

Purchase of property, plant and equipment and intangible assets ( 1,578 ) ( 8,506 )

Purchase of investments subject to significant influence ( 68,681 ) ( 3,973 )

Other — ( 3,370 )

Net cash used in investing activities ( 150,766 ) ( 48,384 )

1 unchanged sentence

Net proceeds from issuance of common stock 319,622 158,050

Proceeds from Ivanhoe Electric convertible notes 86,200 49,999

Proceeds from related party loan 4,000 10,000

Proceeds from VRB convertible bond, net of issuance costs — 22,857

Net transfer from parent — 23,152

Proceeds from subsidiary financings — 5,291

Proceeds from convertible notes — 86,200

Non-controlling interests investment in subsidiary 39,454 —

Proceeds from exercise of stock options 3,422 181

8 unchanged sentences

Supplemental disclosure of non-cash investing and financing activities

Note payable issued as consideration for land purchase $ 82,590 $ —

Non-controlling interests investment in subsidiary 10,546 —

Settlement of loan upon issuance of shares of subsidiary ( 10,546 ) —

Issuance of common stock upon conversion of debt $ — $ 160,140

Issuance of common stock upon settlement of liability — 11,111

Settlement of loan from parent — 5,886

Issuance of common stock in exchange for assets (Note 1) — 65,654

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(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 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.

(“Ivanhoe Electric” or “the Company”) is a US domiciled company that combines advanced mineral exploration technologies with electric metals exploration projects predominantly located in the United States.

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

The Company’s portfolio of electric metals exploration projects include the Santa Cruz Project in Arizona and the Tintic Project in Utah, as well as other exploration projects 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 holds a 50 % interest in a joint venture with Saudi Arabian Mining Company Ma’aden (“Ma’aden”) to explore prospective land in Saudi Arabia.

The Company conducts the following business activities through certain subsidiaries:

11 unchanged sentences

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

On February 6, 2024, Ivanhoe Electric acquired all of the issued and outstanding common shares of Kaizen that were not already beneficially owned by Ivanhoe Electric (Note 25).

Basis of preparation:

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

These consolidated financial statements have been prepared under U.S.

Generally Accepted Accounting Principles (“U.S.

Basis of preparation — Prior to the restructuring:

These 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.

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

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

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.

A description of the costs allocated to the Company is included in Note 20.

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

Nevertheless, the 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.

Reverse stock split:

2 unchanged sentences

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 financial statements have been retrospectively adjusted to reflect the effect of the Reverse Stock Split.

The 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.

The 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.

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

2 unchanged sentences

(a) Basis of measurement:

These consolidated and combined carve-out financial statements have been prepared on the historical cost basis except as disclosed in these accounting policies.

(b) Basis of combination:

The consolidated and combined carve-out financial statements include the accounts of the Company and entities controlled by HPX transferred to Ivanhoe Electric at the time of the restructuring.

These consolidated financial statements have been prepared on the historical cost basis except as disclosed in these accounting policies.

(b) Principles of consolidation:

The consolidated financial statements of the Company include the accounts those subsidiaries where it directly or indirectly has more than 50% of the voting rights and/or has control over the subsidiary.

For entities controlled through less than a 100% ownership interest, a non-controlling interest is recorded to reflect the non-controlling interest’s share of the net loss and net assets of the entity.

Principles of consolidation:

The Company consolidates entities in which it has a controlling financial interest based on either the variable interest entity (“VIE”) or the voting interest model.

18 unchanged sentences

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

20 unchanged sentences

(h) Other investments

Changes in the fair value for equity securities with a readily determinable fair value are reported in the combined carve-out statement of loss.

Changes in the fair value for equity securities with a readily determinable fair value are reported in the consolidated statement of loss.

The Company records equity securities without readily determinable fair values (such as investment in common stock, warrants and options of privately held companies) at cost, less impairment, and makes subsequent adjustments to the carrying values for observable price changes for the identical or a similar investment of the same issuer.

5 unchanged sentences

Direct costs for the acquisition of mineral exploration rights, including option payments, are capitalized and recorded initially at cost as mineral interests.

Exploration and evaluation costs are expensed in the period incurred until such time as it has been determined that a mineral property has proven and probable reserves, in which case subsequent evaluation and costs incurred to develop a mineral property are capitalized.

Exploration and evaluation costs are expensed in the period incurred until such time as it has been determined that a mineral property is commercially feasible, in which case subsequent exploration and evaluation costs incurred to develop a mineral property are capitalized.

Commercial feasibility is

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

generally established when a mineral property has proven and probable reserves, permits or rights to extract the resources and reserves have been obtained and financing to develop the property has been approved.

Mineral interests are not amortized until the underlying property is converted to the production stage, at which point the mineral interests are amortized over the estimated recoverable proven and probable reserves.

19 unchanged sentences

Operating Leases

The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received.

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

For operating leases, the Company records the amortization of the ROU assets and the accretion of the lease liabilities as a single lease cost on a straight-line basis over the lease term.

26 unchanged sentences

A performance obligation is a promise in a contract with a customer to transfer products or services that are distinct.

Determining whether products or services are distinct performance obligations that should be accounted for separately, or combined as one unit of accounting and the allocation of the transaction price to each distinct performance obligation may require significant judgment.

For short term contracts with a single deliverable, the Company recognizes revenue at the point in time when it transfers control of a distinct performance obligation to a customer.

Control transfers on the agreed upon

Determining whether products or services are distinct performance obligations that should be accounted for separately, or combined as one unit of

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

deliverable being delivered to the customer, the customer accepting the deliverable and the Company has not retained any significant risk of future obligations with respect to the service being provided.

The Company is also entered into arrangements for the provision of long-term data processing services.

accounting and the allocation of the transaction price to each distinct performance obligation may require significant judgment.

For short term contracts with a single deliverable, the Company recognizes revenue at the point in time when it transfers control of a distinct performance obligation to a customer.

Control transfers on the agreed upon deliverable being delivered to the customer, the customer accepting the deliverable and when the Company has not retained any significant risk of future obligations with respect to the service being provided.

The Company enters into arrangements for the provision of long-term data processing services.

Such services are recognized as a performance obligation satisfied over time.

18 unchanged sentences

(i) Warranties:

The Company provides maintenance on energy storage products during the warranty period, usually 1 to 5 years.

The Company provides maintenance on energy storage products during the warranty period, typically a fixed number of months agreed upon with the customer.

Costs of warranty include the cost of labor, material and related overhead necessary to repair a product during the warranty period.

1 unchanged sentence

The costs are estimated based on actual historical expenses incurred and on estimated future expenses related to current sales, and are updated each reporting period.

(ii) Asset retirement obligations:

The Company recognizes asset retirement obligations arising from regulatory, contractual or other legal requirements to perform certain property and asset reclamation activities at the end of the respective asset life.

Asset retirement obligations are recorded when environmental disturbance occurs, accompanied by a legal obligation to remediate.

Asset retirement obligations, or increases therein, are initially measured at fair value

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

and subsequently adjusted for accretion expense and changes in the amount or timing of the estimated cash flows.

(ii) Asset retirement obligations:

Asset retirement obligations are recorded when environmental disturbance occurs, accompanied by a legal obligation to remediate.

Asset retirement obligations, or increases therein, are initially measured at fair value and subsequently adjusted for accretion expense and changes in the amount or timing of the estimated cash flows.

(q) Research and development costs:

1 unchanged sentence

(r) Stock-based compensation:

The Company recognizes employee stock-based compensation as an expense in the consolidated and combined carve-out financial statements.

The Company recognizes employee stock-based compensation as an expense in the consolidated financial statements.

Equity-classified awards are measured at the grant date fair value of the award.

2 unchanged sentences

Forfeitures are accounted for as they occur.

The fair value of stock-settled restricted stock units (“RSU’s”) is based on the Company’s stock price on the date of grant.

Shares of common stock are issued at the vesting date for stock-settled RSU’s.

The fair value of stock-settled RSU’s is amortized over the vesting period and recognized as an expense in the consolidated and combined carve-out financial statements.

The fair value of stock-settled restricted stock units (“RSU’s”) and deferred share units (“DSU’s”) is based on the Company’s stock price on the date of grant.

Shares of common stock are issued at the vesting date for stock-settled RSU’s and DSU’s.

The fair value of stock-settled RSU’s and DSU’s is amortized over the vesting period and recognized as an expense in the consolidated financial statements.

(s) Income taxes:

13 unchanged sentences

Unadjusted quoted prices in active markets for identical assets or liabilities accessible at the measurement date.

Quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active markets, quoted prices or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability, and model-based valuation techniques (e.g.

the Black-Scholes model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

term of the asset or liability, and model-based valuation techniques (e.g.

the Black-Scholes model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

(u) Net loss per share:

8 unchanged sentences

Debt issuance costs directly related to a debt liability, including fees, commissions and legal expenses, are deferred and presented as a direct reduction from the carrying amount of the debt and amortized on an effective interest rate method over the term of the liability.

Amortization of debt issuance costs is included in interest expense in the Company’s consolidated and combined carve-out statement of loss.

For debt where the Company has elected fair value accounting under ASC 825, debt issuance costs are expensed on recognition in the Company’s consolidated and combined carve-out statement of net loss.

Amortization of debt issuance costs is included in interest expense in the Company’s consolidated statement of loss.

For debt where the Company has elected fair value accounting under ASC 825, debt issuance costs are expensed on recognition in the Company’s consolidated statement of net loss.

Costs directly attributable to the issuance of equity in the Company are netted against the gross proceeds of the equity.

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

9 unchanged sentences

Changes in technology or the Company’s intended use of these assets, as well as changes in business prospects or economic and industry factors, may cause the estimated useful lives of these assets to change.

(ii) Recoverability of investments in equity securities:

(ii) Impairment indicators in equity securities:

The recoverability of the carrying value of the Company’s investments in private equity securities, including those subject to significant influence, is dependent on the Company’s ability to sell the assets privately or the investees’ ability to publicly list the shares or generate profitable operations and pay dividends in the future, in each case in amounts that exceed the carrying value.

6 unchanged sentences

Certain convertible notes are carried in the statements of financial position at fair value, with changes in fair value reflected in the statement of loss and comprehensive loss.

Fair values are estimated by reference to valuation techniques that may include inputs that are not based on observable market data (Note 13).

Fair values are estimated by reference to valuation techniques that may include inputs that are not based on observable market data.

(v) Valuation of stock options:

The fair value of stock options granted by the Company is estimated using the Black-Scholes pricing model.

Inputs to the model that require management judgment include the options expected life, volatility and share price for the pre-IPO grant.

Inputs to the model that require management judgment include the options expected life and volatility .

Recently adopted accounting standards and recent accounting pronouncements:

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 consolidated and combined carve-out financial statements.

Recent accounting pronouncements not yet adopted

1 unchanged sentence

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

The update was issued 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 on January 1, 2024 and currently does not expect any 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 was issued to clarify the guidance in Topic 820,

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

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 and combined carve-out financial statements, including the possibility of early adoption as of January 1, 2023.

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.

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 and combined carve-out financial statements.

The Company intends to adopt ASU 2022-03 on January 1, 2024 and currently does not expect any impact on the consolidated financial statements.

In August 2023, the FASB issued ASU 2023-05 Business Combinations—Joint Venture Formations (Subtopic 805-60):

Recognition and Initial Measurement.

The update was issued to address the accounting for contributions made to a joint venture, upon formation, in a joint venture’s separate financial statements.

Upon formation, a joint venture will recognize and initially measure its assets and liabilities at fair value (with exceptions to fair value measurement that are consistent with the business combinations guidance).

This update is effective prospectively for all joint venture formations with a formation date on or after January 1, 2025.

In November 2023, the FASB issued ASU 2023-07 Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

This update was issued to improve the disclosures about a public entity’s reportable segments by requiring disclosure of incremental segment information on an annual and interim basis.

The Company is required to adopt ASU 2023-07 on January 1, 2024 and is currently evaluating the expected impact on the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

This update was issued to enhance the transparency and decision usefulness of income tax disclosures primarily related to the rate reconciliation and income taxes paid information.

The Company is required to adopt ASU 2023-09 on January 1, 2025 and is currently evaluating the expected impact on the consolidated financial statements.

Cash and cash equivalents:

Of the total cash and cash equivalents at December 31, 2023 and 2022, $ 15.0 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 (Note 17).

At December 31, 2022, the Company has $ 2.3 million in cash equivalents in the form of redeemable short-term investments (December 31, 2021 - $ 0 ).

2022 December 31,

Raw materials $ 4,935 $ 5,129

Work-in-progress 713 749

$ 5,648 $ 5,878

The Company wrote down $ 1.9 million of inventory during the year ended December 31, 2022 (December 31, 2021 - $ 0 ).

At December 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:

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

Others include its investments in Fjordland Exploration Inc.

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

The Company has elected to carry its investments in common shares of the publicly-traded companies subject to significant influence, Sama and Fjordland, at fair value.

The Company’s principal investment subject to significant influence is its investment in Ma'aden Ivanhoe Electric Exploration and Development Limited Company ("Ma'aden Joint Venture").

Others include its investments in Sama Resources Inc.

(“Sama”), Sama Nickel Corporation (“SNC”), and Go2Lithium Inc.

("Go2Lithium").

The Company has elected to carry its investments in common shares of the publicly-traded companies subject to significant influence at fair value.

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

Carried at fair value Equity Method

(Note a) Fjordland

(Note c) Other Total

Equity Method Carried at fair value

Ma'aden Joint Venture (Note a) SNC

(Note c) Go2Lithium (Note d) Sama

(Note b) SRQ Fjordland Total

Balance at December 31, 2021 — 657 — 5,719 — 1,325 7,701

6 unchanged sentences

Investment 66,013 2,668 1,310 — — — 69,991

Share of income (losses) ( 34,407 ) ( 2,665 ) 1,120 — — — ( 35,952 )

Receipt of shares upon spin-out — — — — 555 — 555

Change in fair value — — — ( 640 ) 739 — 99

Share of loss — — ( 3,711 ) — ( 3,711 )

Reclassification to other investments — — — — ( 1,294 ) ( 309 ) ( 1,603 )

Foreign currency translation — 3 39 — — — 42

Balance at December 31, 2023 $ 31,606 $ 896 $ 2,469 $ 4,159 $ — $ — $ 39,130

(a) Exploration Joint Venture with Ma'aden:

On May 15, 2023, Ivanhoe Electric signed a Common Stock Subscription Agreement (the “Subscription Agreement”) with Ma’aden pursuant to the Heads of Terms entered on January 11, 2023.

On July 6, 2023, the Company completed the closing of the Ma’aden Transactions and entered into an Investor Rights Agreement, a Shareholders’ Agreement and 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 approximately 48,500 km 2 of prospective land (“Ma’aden land”) in Saudi Arabia and a $ 127.1 million strategic investment by Ma'aden in Ivanhoe Electric common stock.

Refer to Note 12 for further information with respect to the Ma’aden investment in Ivanhoe Electric common stock.

In July 2023, Ivanhoe Electric contributed $ 66.0 million in cash into the Ma'aden Joint Venture.

Ma’aden contributed access to Ma’aden land for the purpose of conducting exploration activities as a contribution for its 50 % shareholding in the joint venture.

In addition, Ivanhoe Electric and the Ma'aden Joint Venture entered into a separate Typhoon™ equipment purchase agreement with I-Pulse Inc.

("I-Pulse") under which three Typhoon™ units shall be delivered in 2024 to the Joint Venture for an aggregate contract price of approximately $ 12.0 million.

The exploration phase of the Ma'aden Joint Venture has an initial term of five years that may be extended for up to an additional five years subject to confirmation by both shareholders.

The Shareholder’s Agreement shall terminate at the end of the exploration term if no land area with an economically viable resource has been identified (“Designated Project”).

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

In the event of termination of the shareholder’s agreement or upon conclusion of the exploration phase, the legal and beneficial title to each Typhoon™ unit shall immediately revert to Ivanhoe Electric and Ma’aden shall be entitled to withdraw the land access rights to the Ma’aden land (except concerning Designated Projects).

The Ma'aden Joint Venture is managed by the Board of Directors of the joint venture with Ivanhoe Electric and Ma’aden each having the right to appoint three directors.

Management has determined that the Ma'aden Joint Venture is subject to joint control and will account for the investment using the equity method of accounting.

The Ma'aden Joint Venture has expensed the value of the land access rights of $ 66.0 million, in accordance with Ivanhoe Electric’s accounting policy for exploration and evaluation costs.

Ivanhoe Electric has recognized its 50 % share of loss in the joint venture.

At December 31, 2023 the Ma’aden Joint Venture owes the Company $ 1.3 million for costs that the Company incurred on behalf of the Ma’aden Joint Venture.

Sama is a mineral exploration company, listed on the TSX Venture Exchange, focused on exploring nickel — copper projects in Ivory Coast, West Africa.

As at December 31, 2023, the Company owned 22.7 % (December 31, 2022 — 22.8 %) of the issued and outstanding common shares in Sama.

(b) Fjordland:

Fjordland is a mineral exploration company, listed on the TSX Venture Exchange, focused on the exploration and acquisition of nickel, copper and cobalt projects in Canada.

As at December 31, 2022, the Company owned 16.9 % (December 31, 2021 — 18.8 %) of the issued and outstanding common shares of Fjordland.

The Company has an earn-in agreement with Fjordland on its South Voisey’s Bay Project (Note 17).

The Company has an earn-in agreement with Sama (Note 15), whereby the Company can earn up to a 60 % interest in SNC, a subsidiary of Sama that owns the Ivory Coast Project.

On August 27, 2021 the Company funded a $ 870,000 cash call to SNC which resulted in surpassing the spending threshold to earn its initial 30 % minority equity interest in SNC.

As at December 31, 2023, the Company owned 30 % (December 31, 2022 - 30 %) of the issued and outstanding common shares in SNC.

The Company accounts for its 30 % interest in SNC using the equity method.

Exploration mineral interests:

(d) Go2Lithium:

On April 6, 2023, CGI and Clean TeQ Water Limited, entered into a shareholders agreement whereby both parties became founding and equal 50 % shareholders in Go2Lithium.

Go2Lithium was formed for the purpose of financing, acquiring and/or joint venturing a portfolio of technologies to produce battery grade lithium salts from aqueous sources and to build extraction plants based on proprietary continuous ion-exchange direct lithium extraction technology.

Exploration properties:

(Note a) Tintic

(Note b) Pinaya

(Note c) Pinaya

(Note d) Other Total

1 unchanged sentence

Acquisition costs 11,505 7,550 — — 350 19,405

De-recognition ( 5,700 ) — — — — ( 5,700 )

Foreign currency translation — — — 14 — 14

1 unchanged sentence

Acquisition costs 125,612 3,525 — — 400 129,537

De-recognition ( 5,700 ) — — — — ( 5,700 )

Foreign currency translation — — — ( 5 ) — ( 5 )

1 unchanged sentence

(a) The Santa Cruz Project is a copper project near the city of Casa Grande in Arizona, USA.

(i) Land acquisition:

On May 10, 2023, Ivanhoe Electric signed a binding purchase and sale agreement for the acquisition of land at its Santa Cruz Project in Arizona.

The acquisition closed on May 23, 2023 and totals 5,975 acres of surface title and associated water rights.

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

(i) Assignment agreement :

The total purchase price was $ 116.9 million, of which the Company paid a total of $ 34.3 million to the seller as of closing.

The Company also issued a secured promissory note to the seller in the amount of $ 82.6 million (Note 10).

The Company reports land and water rights associated with its exploration projects in exploration properties.

Directly attributable acquisition costs of $ 2.2 million were capitalized on acquisition.

(ii) Assignment agreement:

On October 27, 2021, the Company entered into an agreement with Central Arizona Resources Ltd.

(“CAR”), a private company, and acquired the option agreement CAR held over the Santa Cruz mineral title owned by DRH Energy Inc.

(“DRHE”), and a surface use agreement CAR was party to with another private Arizona based company

(“CAR”), a private company, which included the acquisition of the option agreement CAR held over the Santa Cruz mineral title owned by DRH Energy Inc.

The total consideration paid to CAR for the assignment of the option and surface access agreements to the Company was as follows:

2 unchanged sentences

• $ 15.0 million and issuance of 945,626 shares of common stock of the Company upon completion of the Company’s IPO on June 30, 2022.

The purchase of the agreements was binding as the Company had no right to avoid the payment of the purchase price.

On October 27, 2021, a $ 26.6 million exploration mineral interest was capitalized and a corresponding liability (reported as deferred consideration payable in the statement of financial position) was recorded.

The liability was settled on June 30, 2022.

(ii) Option agreement:

(iii) Option agreement:

The option agreement provides the Company with the right, but not the obligation, to acquire 100 % of the mineral title of the Santa Cruz Project by paying $ 27.9 million to DRHE over three years .

As at December 31, 2023, $ 17.9 million in cash payments have been made, $ 17.4 million of which were capitalized as exploration mineral interests.

In order to maintain the option, the following payments must be made:

• $ 6.25 million due on or before August 16, 2023;

• $ 10.0 million due within five days of exercising the option to acquire the mineral title.

The deadline to exercise the option is August 16, 2024.

The deadline to exercise the option is August 16, 2024, at which time the final $ 10.0 million payment becomes due.

The payments are payable in cash or common stock of the Company at the discretion of DRHE.

(iii) Surface access agreement :

The surface access agreement acquired from CAR is an agreement with another Arizona based private company, which owns certain surface rights.

In order to maintain surface access rights, the Company must make certain payments.

As at December 31, 2022, $ 1.6 million in payments have been made and recorded as exploration expense in the consolidated and combined carve-out statement of loss.

A further $ 800,000 is due on September 9, 2023.

The agreement expires on August 3, 2025 but may be extended by one year at the Company’s discretion by making a payment of $ 920,000 .

(iv) 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 September 2022, the Company elected not to proceed with the transaction and terminated the purchase and sale agreement.

In September 2022, the Company elected to terminate a transaction to acquire additional land adjacent to the Santa Cruz project and the associated mineral rights.

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 consolidated and combined carve-out statement of loss (Note 16).

(b) The Tintic project is a copper-gold-silver project in the Tintic District of Utah, USA representing the Company’s accumulation of rights owned by a variety of different parties.

These payments have been de-recognized and recorded as exploration expenses in the consolidated statement of loss (Note 14).

(b) The Tintic project is a copper-gold-silver project in the Tintic District of Utah, USA.

Pursuant to agreements entered into in 2017 and 2018, the Company obtained the right to explore the underlying assets and to acquire or optionally acquire specified mineral rights of the underlying assets by making scheduled payments.

Payments under these agreements are capitalized as acquisition costs while costs associated with exploring the properties are expensed as exploration costs.

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

The Company must make further option payments in 2023 in the amount of $ 3.5 million in order to complete its purchase of 100 % of the assets included in the agreements.

(c) The Pinaya Project is 100 % indirectly owned by Kaizen and covers 101 square kilometers of granted title, 28 square kilometers under application and includes 10 kilometers of underexplored strike length in southeastern Peru.

(d) The San Matias Project is 100 %-owned by Cordoba, which includes 100 % of the Alacran Deposit and satellite deposits at Montiel East, Montiel West and Costa Azul.

Property, plant and equipment:

The Company’s property, plant and equipment includes equipment and vehicles, computer equipment, leasehold improvements, leased assets and land.

December 31, 2022 December 31, 2021

Amount Accumulated

depreciation Net

Amount Accumulated

depreciation Net

Equipment and vehicles 3,124 ( 1,959 ) 1,165 3,076 ( 2,161 ) 915

Computer equipment 587 ( 240 ) 347 400 ( 120 ) 280

Leasehold improvements 773 ( 377 ) 396 582 ( 406 ) 176

Land and buildings 858 — 858 720 — 720

Right of use assets 5,488 ( 4,320 ) 1,168 4,435 ( 4,003 ) 432

Total property, plant and equipment 10,830 ( 6,896 ) 3,934 9,213 ( 6,690 ) 2,523

Depreciation expense for the years ended December 31, 2022 and 2021 was $ 1,263,000 and $ 1,081,000 respectively.

Intangible assets:

The Company’s intangible assets include patents and licenses, computer software and artificial intelligence intellectual property.

December 31, 2022 December 31, 2021

Amount Accumulated

amortization Net

Amount Accumulated

amortization Net

Patents and licenses 13,829 ( 13,520 ) 309 13,835 ( 13,328 ) 507

Computer Software 1,187 ( 1,180 ) 7 1,201 ( 1,194 ) 7

Artificial intelligence intellectual property 13,174 ( 12,241 ) 933 14,119 ( 10,293 ) 3,826

Total intangible assets 28,190 ( 26,941 ) 1,249 29,155 ( 24,815 ) 4,340

Amortization expense for the years ended December 31, 2022 and 2021 was $ 2.9 million and $ 3.2 million respectively.

In 2023, the Company made option payments of $ 3.5 million, which completed its purchase of 100 % of the assets included in the agreements.

(c) The San Matias Project is Cordoba’s project in Colombia, which includes 100 % of the Alacran Deposit and satellite deposits at Montiel East, Montiel West and Costa Azul.

On May 8, 2023, Cordoba closed a strategic arrangement with JCHX Mining Management Co., Ltd (“JCHX") to advance the Alacran Project in Colombia.

Refer to Note 16 for further details regarding the strategic arrangement.

(d) The Pinaya Project is 100 % indirectly owned by Kaizen and covers 101 square kilometers of granted title, 28 square kilometers under application and includes 10 kilometers of underexplored strike length in southeastern Peru.

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

3 unchanged sentences

Deposit (Note a) $ 4,233 $ 7,128

Value added taxes recoverable — 1,699

Related party advances (Note 19) 1,169 1,987

6 unchanged sentences

Accrued liabilities 3,481 6,666

Due to related parties 1,645 1,564

Other payables 1,963 1,135

$ 19,948 $ 13,943

Note payable:

Balance at December 31, 2022 $ —

Issuance 82,590

Finance expense 4,314

Payment ( 37,988 )

Balance at December 31, 2023 $ 48,916

Current portion 12,672

Non-current portion 36,244

Balance at December 31, 2023 $ 48,916

In connection with the land acquisition described in Note 7, the Company issued a secured promissory note in the amount of $ 82.6 million.

The promissory note includes an annual interest rate of prime plus 1 % and is to be paid in installments, as follows:

• $ 34.3 million, plus accrued interest, paid in November 2023;

• four equal principal payments of $ 12.1 million on the first, second, third and fourth anniversaries of the November 2023 payment, plus applicable accrued interest.

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

Convertible debt:

5 unchanged sentences

Change in fair value 8,709 10,256 — 18,965

Conversion to common stock ( 63,684 ) ( 96,456 ) — ( 160,140 )

Balance at December 31, 2022 — — 25,918 25,918

Debt issuance — 86,200 — 86,200

Finance expense — — 2,454 2,454

Change in fair value 8,709 10,256 — 18,965

Conversion to common stock ( 63,684 ) ( 96,456 ) — ( 160,140 )

Balance at December 31, 2023 $ — $ — $ 28,372 $ 28,372

1 unchanged sentence

(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 12).

1 unchanged sentence

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”).

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

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 12).

9 unchanged sentences

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 %.

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

(a) Common stock transactions:

(i) Ma'aden Strategic Investment:

On July 6, 2023 Ivanhoe Electric completed the closing of the Ma'aden transactions which included the issuance of 10.3 million shares of common stock, representing 9.9 % of common shares on completion of the Ma'aden transactions, at a purchase price of $ 12.38 per share for gross proceeds of $ 127.1 million.

Directly attributable issuance costs of $ 3.5 million were incurred in conjunction with the strategic investment were recorded as a reduction in paid in capital.

Ivanhoe Electric granted Ma’aden a top-up right allowing Ma’aden to maintain its 9.9 % ownership for up to eight years through the purchase of additional shares at a price per share paid in a recent equity financing.

Ma’aden has agreed to a five-year standstill limiting its shareholding to a maximum of 19.9 %, subject to certain exceptions.

Ma’aden was granted the right to appoint a nominee to the Ivanhoe Electric board of directors.

(ii) Public offering and subscription agreement:

On September 18, 2023, Ivanhoe Electric completed a public offering and issued 13.6 million shares of common stock at a price of $ 13.50 per share for gross proceeds of $ 184.0 million.

Directly attributable issuance costs of $ 8.5 million were incurred in conjunction with the public offering were recorded as a reduction in paid in capital.

On October 23, 2023 Ma’aden signed a subscription agreement, exercising their right to maintain 9.9 % ownership in the Company following the public offering.

The Company issued 1.5 million shares of common stock to Ma’aden at a price of $ 13.50 per share for gross proceeds of $ 20.4 million.

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 $ 11.0 million incurred in conjunction with the IPO were recorded as a reduction in paid in capital.

(ii) Debt conversions:

(iv) 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.

On June 30, 2022, $ 86.8 million of Series 2 Convertible Notes 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 note conversions was recorded at fair value based on the IPO price of $ 11.75 per share.

(iii) Stock issuance to CAR:

(v) 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.

At December 31, 2023, the Company is authorized to issue 700,000,000 shares of common stock, at $ 0.0001 par value.

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

(iv) 2021 restructuring and financing:

On April 30, 2021, Ivanhoe Electric completed a restructuring that resulted in HPX distributing 59,909,344 shares of common stock of Ivanhoe Electric to the shareholders of HPX (Note 1).

In August, September and November, 2021, Ivanhoe Electric completed a financing that included the issuance of 4,015,990 shares of common stock.

The shares were issued at a price of $ 2.49 per share, resulting in gross proceeds of $ 10.0 million.

Directly attributable transaction costs of $ 322,000 were netted against the gross proceeds of the equity issuance.

At December 31, 2022, the Company is authorized to issue 750,000,000 shares of common stock, at $ 0.0001 par value.

(b) Stock-based compensation:

10 unchanged sentences

Exploration expenses 3,277 1,643

Research and development expenses 11 —

General and administrative expenses 17,670 3,029

$ 20,963 $ 4,833

Ivanhoe Electric currently has awards outstanding under various stock-based compensation plans.

The Company adopted a Long Term Incentive Plan (“LTIP”) on June 30, 2022.

4 unchanged sentences

(i) Stock options:

On November 21, 2022, Ivanhoe Electric granted 2.76 million stock options to certain officers and employees of the Company at an exercise price of $ 11.75 per share.

Ivanhoe Electric granted stock options to certain officers and employees as follows:

Grant Date Options granted Exercise price

February 1, 2023 500,000 $ 13.23

March 1, 2023 100,000 $ 15.46

July 1, 2023 100,000 $ 13.04

August 9, 2023 200,000 $ 16.03

December 1, 2023 50,000 $ 11.75

November 21 - 29, 2022 2,760,509 $ 11.75

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.

On June 30, 2021, under a prior equity incentive plan, Ivanhoe Electric granted 4.48 million stock options to certain directors, officers and employees of the Company at exercise price of $ 2.49 per share.

A summary of stock options outstanding and activity is presented below.

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

A summary of stock options outstanding as of December 31, 2022 and activity during the year then ended is presented below.

of options Weighted-

6 unchanged sentences

Outstanding at December 31, 2022 7,071,164 $ 6.11 4.8 $ 42,745

Granted 950,000 $ 13.96

Exercised ( 1,379,526 ) $ 2.49

Forfeited/expired ( 442,701 ) $ 6.13

Outstanding at December 31, 2023 6,198,937 $ 8.11 4.5 $ 20,207

Vested and exercisable at December 31, 2022 2,164,812 $ 2.49 3.5 $ 20,912

Vested and exercisable at December 31, 2023 2,766,116 $ 5.51 3.6 $ 14,151

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

1 unchanged sentence

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.

For the June 30, 2021 grant, the grant date fair value of the shares of common stock was determined by the Company’s Board of Directors using input from a valuation performed by an independent third-party valuation specialist.

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 years ended December 31, 2023 and 2022 is presented below.

November 21, 2022 Grant date:

June 30, 2021

Weighted average assumptions used to value stock option awards:

7 unchanged sentences

(ii) Stock-settled RSU’s:

On January 1, 2023, Ivanhoe Electric granted 750,000 stock-settled RSUs to an 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.

On November 21, 2022 Ivanhoe Electric granted 750,000 stock-settled RSU’s to an executive of the Company.

2 unchanged sentences

The total fair value of the November 21, 2022 RSU grant was $ 7.5 million.

A summary of outstanding stock-settled RSU’s as of December 31, 2022 and activity during the year then ended is presented below.

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

A summary of outstanding stock-settled RSU’s as of December 31, 2023 and activity during the year then ended is presented below.

of awards Weighted-Average

4 unchanged sentences

Outstanding at December 31, 2022 750,000 $ 9.98 $ 9,113

Granted 750,000 $ 12.15

Vested ( 250,000 ) $ 9.98

Forfeited — $ —

Outstanding at December 31, 2023 1,250,000 $ 9.98 $ 12,600

For the year ended December 31, 2023 the Company recognized $ 8.4 million in stock based compensation expense relating to the vesting of RSU’s.

At December 31, 2023 the Company had $ 7.6 million of total unrecognized compensation cost to be recognized in 2024 through 2027 in relation to stock-settled RSU’s.

6 unchanged sentences

Total $ 3,903 $ 8,440

(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.

(a) In January 2022, the Company received a one-time fee of $ 6.5 million with respect to a software licensing agreement whereby the Company provided software that can be used by the licensee in perpetuity.

Upon receipt of payment, the performance obligations were met and the license fee revenue was recognized in accordance with the Company’s accounting policy.

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

3 unchanged sentences

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

5 unchanged sentences

San Matias, Colombia (Cordoba) (Note 7(d)) 28,068 18,454

Pinaya, Peru (Kaizen) (Note 8(c)) 2,616 1,774

Tintic, USA (Note 7(b)) 13,131 2,282

Hog Heaven, USA (Note 15) 7,812 2,216

Yangayu, Papua New Guinea 2,128 497

Perseverance, USA (Cordoba) (Note 17) 1,785 742

Carolina, USA (Note 17) 1,307 —

Lincoln, USA 3,684 1,312

Bitter Creek, USA 644 340

Ivory Coast Project, Ivory Coast (Note 17) 70 1,931

White Hill, USA (Note 15) 1,451 —

Carolina, USA (Note 15) 1,337 1,307

Pinaya, Peru (Kaizen) (Note 7(c)) 958 2,616

Project Generation and other 13,075 15,927

11 unchanged sentences

The table also presents certain information with respect to the earn-in option (cumulative expenditures to date, expenditures necessary to obtain an initial minority ownership right and expenditures required to achieve the maximum ownership interest available under the agreement).

Exploration expenditures made in respect of these earn-in arrangements, which are at the discretion of the Company and therefore

Exploration expenditures made in respect of these earn-in arrangements, which are at the discretion of the Company and therefore exceed contractual obligations, are presented in Note 14.

The Company funds exploration expenditures in excess of contractual requirements for the purpose of evaluating and investing in option agreements.

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

exceed contractual obligations, are presented in Note 20.

The Company funds exploration expenditures in excess of contractual requirements for the purpose of evaluating and investing in option agreements.

Project Investment

Entity Cumulative Earn-In

Expenditures and payments

as of December 31, 2023 Ownership

5 unchanged sentences

$ — Cdn $ 24.4 million 30 % Cdn $ 25 million 60 %

South Voisey’s Bay $ 309 (1)

— Cdn $ 4.2 million 0 % (3)

Cdn $ 7.7 million 65 %

Hog Heaven $ 1,885 (2)

5 unchanged sentences

$ 26.0 million 85 %

White Hill $ — $ — $ 1.4 million 0 % (5)

$ 15.0 million 80 %

_______________

1 unchanged sentence

(2) Included in other investments.

(3) The Company must incur Cdn $ 7.7 million in earn-in expenditures to earn a 65 % interest in the South Voisey’s Bay project.

There is no initial minority interest that can be earned by the Company.

(4) The Company must incur $ 19.5 million in earn-in expenditures to earn an initial 51 % interest in the Hog Heaven project.

(3) The Company must incur $ 15.0 million in earn-in expenditures and make payments to the counterparty totalling $ 4.5 million to earn an initial 51 % interest in the Hog Heaven project.

(4) The Company must incur $ 6.0 million in earn-in expenditures to earn an initial 51 % interest in the Carolina project.

(5) The Company must incur $ 10.0 million in earn-in expenditures and make payments to the counterparty totalling $ 5.0 million to earn a 80 % interest in the White Hill project.

The $ 5.0 million in payments due are $ 3.6 million in cash and $ 1.4 million in common stock of the Company.

Non-controlling interests investment in subsidiary:

On May 8, 2023, Cordoba closed the $ 100 million strategic arrangement with JCHX Mining Management Co., Ltd (“JCHX") to advance the Alacran Project in Colombia.

Upon closing, JCHX received a 50 % ownership interest in CMH Colombia S.A.S.

(“CMH”), a Colombian company that 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.

As of the closing of the transaction, $ 40 million was paid as a first installment.

On January 4, 2024, Cordoba announced receipt of the second installment of $ 40 million that was payable in cash upon the board of 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, with $ 10 million of this amount paid in late December 2023 and the remaining $ 30 million settled in January 2024.

A third and final installment of $ 20 million is receivable in cash upon the approval of the EIA, 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.

In the event JCHX does not pay the third installment, JCHX’s and Cordoba’s ownership of CMH shares will be adjusted to 40 % and 60 %, respectively.

The Company currently retains control over the relevant activities of CMH therefore continues to consolidate the entity.

The Company measures its non-controlling interest and loss attributable to non-controlling shareholders on the basis of a hypothetical liquidation at book value.

Upon closing, the Company recorded the difference between the consideration received and the carrying value of the interest given up of $ 18.0 million in additional paid in capital.

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

Non-controlling interests:

2 unchanged sentences

The assets and liabilities of these entities are not readily accessible by the Company for general corporate purposes as distribution may require the consent of other shareholders.

Kaizen VRB Cordoba Other Total

Kaizen VRB Cordoba CGI Total

Balance at January 1, 2022 1,072 ( 1,123 ) 6,004 ( 72 ) 5,881

Non-controlling interests share of loss ( 788 ) ( 879 ) ( 7,481 ) ( 43 ) ( 9,191 )

Non-controlling interests share of (loss) income ( 617 ) ( 1,376 ) ( 8,536 ) 121 ( 10,408 )

Changes in non-controlling interests arising from changes in ownership interest — — 69 — 69

1 unchanged sentence

Balance at December 31, 2022 523 ( 2,471 ) ( 2,026 ) 46 ( 3,928 )

Non-controlling interests share of loss ( 617 ) ( 1,376 ) ( 8,536 ) 121 ( 10,408 )

Non-controlling interests share of (loss) income ( 259 ) ( 1,323 ) ( 15,196 ) 80 ( 16,698 )

Changes in non-controlling interests arising from changes in ownership interest — — 22,896 — 22,896

1 unchanged sentence

Balance at December 31, 2023 $ 316 $ ( 3,783 ) $ 5,366 $ 131 $ 2,030

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

Assets and liabilities belonging to the Company’s principal non-wholly owned subsidiaries as of December 31, 2023 are as follows:

Kaizen VRB Cordoba Other Total

Kaizen VRB Cordoba CGI Total

Ownership percentage at December 31, 2023:

13 unchanged sentences

Further information about VRB, including its impact on the Company’s loss from operations, is presented as the Energy Storage segment in Note 23.

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

Income taxes:

Major components of the Company’s income tax provision / (benefit) for the years ended December 31, 2022 and 2021 are as follows:

Total income tax provision / (benefit) for the years ended December 31, 2023 and 2022 are allocated as follows:

Year ended December 31,

Income from continuing operations $ ( 584 ) $ 618

Equity, non-controlling interests investment in subsidiary 2,846 —

Total income tax provision / (benefit) $ 2,262 $ 618

Major components of the Company’s income tax provision / (benefit) from continuing operations for the years ended December 31, 2023 and 2022 are as follows:

Year ended December 31,

Operations $ — $ —

5 unchanged sentences

Total income tax provision / (benefit) $ ( 584 ) $ 618

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

Income (loss) from continuing operations before income taxes for the years ended December 31, 2023 and 2022 consists of the following:

3 unchanged sentences

Total $ ( 216,659 ) $ ( 159,603 )

The annual income tax expense (benefit) is different from the amount that would be provided by applying the statutory federal income tax rate to the Company’s pretax (loss) income.

The annual income tax expense (benefit) attributable to income from continuing operations is different from the amount that would be provided by applying the statutory federal income tax rate to the Company’s pretax (loss) income.

The reasons for the difference are:

7 unchanged sentences

Change in valuation allowance 42,849 24,905

Difference in current versus future tax rates — ( 351 )

Impact of changes in tax rates — ( 608 )

Other ( 886 ) ( 410 )

Income tax expense $ 618 $ 484

Income tax (recovery) expense $ ( 584 ) $ 618

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2023 and 2022 are presented below.

1 unchanged sentence

Deferred tax assets:

Intangible assets $ 50 $ 91

Exploration mineral interest 41,572 27,840

Net operating losses 59,324 37,730

Equity method investment in joint venture 8,602 —

Foreign capital losses 5,470 4,012

Capital loss carry-forward 1,282 1,282

Share issuance costs 132 202

Convertible debt — 960

Other 1,341 319

Total gross deferred tax assets 117,591 71,183

3 unchanged sentences

Exploration mineral interest ( 4,671 ) ( 3,686 )

Property, plant and equipment ( 322 ) ( 1,081 )

Other ( 611 ) ( 322 )

Total gross deferred tax liabilities ( 5,282 ) ( 4,008 )

Net deferred tax liability $ ( 4,845 ) $ ( 3,888 )

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

The Company evaluated the positive and negative evidence available to determine the amount of valuation allowance required on its deferred tax assets.

4 unchanged sentences

Balance, beginning of year $ ( 71,063 ) $ ( 45,619 )

Decrease due to foreign currency translation ( 614 ) 1,614

(Increase) due to foreign currency translation ( 5,704 ) ( 614 )

(Increase) related to non-utilization of deferred tax assets due to uncertainty of recovery and (increase) related to non-utilization of net operating loss carryforwards ( 42,485 ) ( 24,905 )

12 unchanged sentences

As of December 31, 2023, no change in control has occurred in the Ivanhoe Electric group.

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

The Company file’s income tax returns in the U.S.

10 unchanged sentences

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 CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

(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 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 certain significant related parties.

5 unchanged sentences

I-Pulse (Note c) 1,395 — 3,107 213

HPX (Note d) — — — 499

Total 1,619 1,466 17,578 14,585

Global Mining (Note a) 1,169 1,987 — —

Ma'aden Joint Venture (Note 6(a)) 1,254 — — —

I-Pulse (Note c) 4,233 7,128 — —

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

JCHX Mining Management Co., Ltd (Note d) 4,000 10,010 — —

Transactions for the year ended

2 unchanged sentences

Exploration expenses 8,231 8,353

Research and development expenses 1,878 —

17,578 14,585

(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.

(“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 December 31, 2023.

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

On April 30, 2021, the Contributed Assets received by Ivanhoe Electric included working capital advances to Global Mining totaling $ 791,000 (Note 1).

These advances were recognized on the contribution date.

(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.

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

(“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 the next three years .

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 deposit payments totaling $ 7.1 million ( 7.1 million Euros).

(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.

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 maintenance costs of $ 1.7 million.

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

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.

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

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

Post restructuring, in 2021, there was reimbursement to HPX for certain costs paid by HPX on the Company’s behalf.

(e) JCHX Mining Management Co., Ltd (“JCHX") held 19.9 % of Cordoba’s issued and outstanding common stock as at December 31, 2022 (December 31, 2021 - 19.9 %).

On December 27 2022, JCHX advanced a bridge loan of $ 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, which shall be calculated on the basis of a 365-day year.

Upon closing the project financing transaction described in Note 26, all of the principal and interest outstanding on the bridge loan will be applied towards that transaction’s first installment as a payment in kind.

In the event the bridge loan is not repaid, JCHX has 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.

In December 2023, the Company received the first Typhoon™ transmitter that was deliverable under the agreement.

(d) JCHX held 19.8 % of Cordoba’s issued and outstanding common stock as at December 31, 2023 (December 31, 2022 - 19.9 %).

In November 2023, $ 4 million was advanced to Cordoba by JCHX.

The loan bears simple interest at 12 % per annum and is payable on its maturity date, which is the earlier of twelve months after the date of the loan agreement, and the date the second installment of $ 40 million becomes payable by JCHX under the strategic arrangement described in Note 16.

In January 2024, the $ 4 million loan was settled in full by applying it towards the second installment as a payment in kind.

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

The bridge loan was for an 18 -month term and bore 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 strategic arrangement described in Note 16 all of the principal and interest outstanding on the bridge loan was applied towards that transaction’s first installment as a payment in kind.

Net loss per share:

8 unchanged sentences

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

9 unchanged sentences

Financial liabilities:

Ivanhoe Electric convertible notes — — — — — 54,975

Deferred consideration payable — — — — — 26,562

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

3 unchanged sentences

Balance at December 31, 2021 $ 26,562

Additions 26,625

Changes in fair value 2,049

Settlement ( 28,611 )

Balance at December 31, 2022 —

Changes in fair value —

Settlement ( 28,611 )

Balance at December 31, 2023 $ —

Financial risk management:

The Company is exposed in varying degrees to credit, liquidity, and market risk through its use of financial instruments.

The types of risk exposure and the way in which such exposures are managed are as follows:

(a) Credit risk:

The Company is exposed in varying degrees to credit risk through its use of financial instruments.

The Company’s principal financial assets are cash and cash equivalents and accounts receivable.

5 unchanged sentences

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 Company’s President & Chief Executive Officer is 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

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.

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

that it has three reportable segments.

The Company’s reportable segments are critical metals, data processing and energy storage.

The data processing segment provides data analytics, geophysical modeling and artificial intelligence services for the mineral, oil & gas and water exploration industries.

5 unchanged sentences

Intersegment revenues — 100 — 100

Loss (income) from operations 124,932 ( 3,090 ) 10,323 132,165

Loss from operations 169,467 1,363 9,572 180,402

Depreciation and amortization 1,062 995 583 2,640

6 unchanged sentences

Intersegment revenues — 323 — 323

Loss from operations 53,188 633 6,928 60,749

Loss (income) from operations 124,932 ( 3,090 ) 10,323 132,165

Depreciation and amortization 814 2,868 529 4,211

8 unchanged sentences

Total $ 3,903 $ 8,440

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

Revenues are attributed to countries based on the location in which the sale originated.

8 unchanged sentences

Long-lived assets comprise the Company’s exploration mineral interests (excluding a mineral royalty) and property, plant and equipment.

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

Long-lived assets reconcile to segment assets and the balance sheet as follows:

13 unchanged sentences

Subsequent events:

(a) Strategic arrangement for the joint-development of the Alacran project

On December 8, 2022, Cordoba announced a strategic arrangement with JCHX, whereby JCHX, through a wholly owned subsidiary, will purchase a 50 % ownership interest in CMH, a company existing under the laws of Colombia, for aggregate consideration of $ 100 million.

CMH will own 100 % of the Alacran Project and will be the joint venture vehicle for Cordoba and JCHX in the strategic project level partnership.

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

At the closing of the transaction, which is expected to occur before the end of the second quarter of 2023, $ 40 million will be payable in cash as a first installment.

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

IVANHOE ELECTRIC INC.

NOTES TO THE CONSOLIDATED AND COMBINED CARVE-OUT FINANCIAL STATEMENTS

(Tabular amounts expressed in thousands of U.S.

dollars, unless otherwise indicated)

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 in cash to Cordoba.

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

The closing of the transaction is subject to customary conditions and Cordoba must receive approval from the TSX Venture Exchange and approval of shareholders (excluding JCHX and Ivanhoe Electric).

JCHX must receive approval from its board of directors, shareholders, China’s State Administration of Foreign Exchange, and Beijing Municipal Bureau of Commerce.

Cordoba received the approval of its shareholders (excluding JCHX and Ivanhoe Electric) on February 8, 2023.

(b) Heads of Terms agreement

On January 11, 2023, the Company entered into a binding Heads of Terms (the “Agreement”) with Saudi Arabian Mining Company Ma’aden (“Ma’aden”).

The Agreement provides the binding framework of key terms for a strategic investment by Ma’aden of an aggregate of $ 126.4 million in newly issued shares of common stock of the Company and the concurrent establishment of a 50/50 exploration joint venture in the Kingdom of Saudi Arabia.

Pursuant to the terms of the Agreement, the Company will agree to issue and sell to Ma’aden approximately 10.2 million shares of common stock at a purchase price of $ 12.38 per share for aggregate gross proceeds of $ 126.4 million in a private placement.

The Company will contribute $ 66.4 million of the proceeds from the issuance and sale of the Shares to fund the Joint Venture and will retain $ 60 million of the gross proceeds to advance its United States mineral projects, as well as for working capital and general corporate purposes

After the issuance and sale of the Shares, Ma’aden will hold 9.9 % of the Company’s common stock.

The Company also will grant Ma’aden a right to purchase additional shares of common stock to maintain its 9.9 % stock ownership position in the event of any issuances of common stock by the Company in the future.

On February 22, 2023, we 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.

During the earn-in period, we have the exclusive right to operate, control and direct all exploration and mineral development activities at the White Hill Project.

There are no minimum expenditures required in any given year, and we have the right to cease making payments at any time, resulting in us earning no interest in the project.

On February 6, 2024, Ivanhoe Electric acquired all of the issued and outstanding common shares of Kaizen not already beneficially owned by Ivanhoe Electric pursuant to a plan of arrangement under the Business Corporations Act (British Columbia) (the “Arrangement”).

Immediately prior to the closing of the Arrangement, Ivanhoe Electric beneficially owned 54,428,971 common shares of Kaizen, representing 82.54 % of the issued and outstanding common shares on a non-diluted basis.

Following the closing of the Arrangement, Ivanhoe Electric beneficially owns 69,229,659 Common Shares, representing 100 % of the issued and outstanding common shares on a fully diluted basis.

Ivanhoe Electric acquired the common shares in consideration for the issuance of one share of common stock of Ivanhoe Electric for every 127 Common Shares issued and outstanding immediately prior to the closing of the Arrangement.

A total of 116,413 shares of Ivanhoe Electric were issued.

Kaizen was delisted from the TSX Venture Exchange on February 7, 2024.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosures

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 8. Financial Statements and Supplementary Data