What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-08-07 compared with 2024-05-08 · 134 added, 54 removed, 189 unchanged (50% of the section changed)

28 unchanged sentences

operations are subject to additional political, economic and other uncertainties not generally associated with domestic operations;

our activities may be hindered, delayed or have to cease as a result of climate change effects, including increased and excessive heating and the potential for forest fires at many of our properties;

and our operations may be impacted by the COVID-19 pandemic, including impacts to the availability of our workforce, government orders that may require temporary suspension of operations, and the global economy.

and our activities may be hindered, delayed or have to cease as a result of climate change effects, including increased and excessive heating and the potential for forest fires at many of our properties.

You should carefully consider these risks, as well as the additional risks described in other documents we file with the SEC.

8 unchanged sentences

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

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

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

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

10 unchanged sentences

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

On May 7, 2024, we entered into an Exploration Alliance Agreement with BHP Mineral Resources Inc.

(“BHP”), which sets out the framework for BHP and the Company to explore mutually agreed “Areas of Interest” in the United States to identify copper and other critical metal exploration opportunities within those Areas of Interest that may become 50/50 owned joint ventures following a discovery.

The Agreement is for a term of three years, which may be extended upon mutual agreement.

BHP will provide the initial funding of $15 million and thereafter the Company and BHP would provide funding on a 50/50 basis.

The Company will provide access to one Typhoon™ system for use pursuant to the Exploration Alliance Agreement.

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

20 unchanged sentences

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

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

For the three months ended March 31, 2024 we recorded a net loss attributable to common stockholders of $55.5 million ($0.46 per share), compared to $36.1 million ($0.39 per share) for the three months ended March 31, 2023, which was an increase of $19.4 million.

Significant contributors to this increase for the three months ended March 31, 2024 included an increase of $17.1 million in exploration expenditures, an increase of $2.0 million in general and administrative expenses, an increase of $2.4 million in the share of loss of equity method investees and a decrease of $0.3 million in revenue compared to the three months ended March 31, 2023.

Exploration expenses were $43.6 million for the three months ended March 31, 2024, an increase of $17.1 million from $26.6 million for the three months ended March 31, 2023.

Three Months Ended June 30, 2024 Compared to the Three Months Ended June 30, 2023

For the three months ended June 30, 2024 we recorded a net loss attributable to common stockholders of $46.8 million ($0.39 per share), compared to $38.3 million ($0.41 per share) for the three months ended June 30, 2023, which was an increase of $8.5 million.

Significant contributors to this increase for the three months ended June 30, 2024 included an increase of $4.7 million in exploration expenditures, an increase of $0.8 million in the share of loss of equity method investees and a decrease of $0.8 million in revenue, partially offset by a decrease of $2.0 million in general and administrative expenses compared to the three months ended June 30, 2023.

Exploration expenses were $37.3 million for the three months ended June 30, 2024, an increase of $4.7 million from $32.6 million for the three months ended June 30, 2023.

Exploration expenses consisted of the following:

6 unchanged sentences

Hog Heaven, USA 2,530 416

Unity, USA 1,552 —

Samapleu Project, Ivory Coast 1,414 —

Carolina, USA 300 790

4 unchanged sentences

Total $ 37,254 $ 32,551

During the three months ended March 31, 2024, exploration expenditures largely focused on activities at:

• the Santa Cruz Project where $27.8 million of exploration expenditure was incurred in the three months ended March 31, 2024 compared to $14.7 million incurred in the three months ended March 31, 2023.

Activities during the three months ended March 31, 2024 at Santa Cruz were focused on a program of infill resource drilling, geotechnical, hydrological, and metallurgical drilling along with advancing permitting and technical studies required to support a prefeasibility study;

• the San Matias Project where $3.5 million of exploration expenditure was incurred by Cordoba Minerals for the three months ended March 31, 2024 focused on preparations for detailed engineering design of the Alacran mine;

• the Tintic Project where $3.5 million of exploration expenditure was incurred in the three months ended March 31, 2024 compared to $1.1 million incurred in the three months ended March 31, 2023.

Activities during the three months ended March 31, 2024 were focused on diamond drilling in the Mammoth area;

• the Hog Heaven Project where $3.3 million of exploration expenditure was incurred in the three months ended March 31, 2024 compared to $0.6 million incurred in the three months ended March 31, 2023.

Activities during the three months ended March 31, 2024 were focused on diamond drilling in the Flathead Mine area.

General and administrative expenses were $12.6 million for the three months ended March 31, 2024, an increase of $2.0 million from $10.6 million for the three months ended March 31, 2023.

Contributing to the increase, was a $2.0 million increase in salaries due to the payment of $1.8 million in short term cash bonuses awarded during the three months ended March 31, 2024.

There were no short term incentive awards paid in the three months ended March 31, 2023.

This increase was offset by a $0.5 million decrease in directors and officers insurance expenses for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 due to reduced insurance premiums.

Share of loss of equity method investees was $3.0 million for the three months ended March 31, 2024, an increase of $2.4 million from $0.6 million for the three months ended March 31, 2023.

The increase in loss was due to our $2.1 million share of the loss from the Ma'aden joint venture three months ended March 31, 2024.

During the three months ended June 30, 2024, exploration expenditures largely focused on activities at:

• the Santa Cruz Project where $20.5 million of exploration expenditure was incurred in the three months ended June 30, 2024 compared to $15.0 million incurred in the three months ended June 30, 2023.

Activities during the three months ended June 30, 2024 at Santa Cruz were focused on a program of infill resource drilling, geotechnical, hydrological, and metallurgical drilling/laboratory testing along with advancing permitting and technical studies required to support a prefeasibility study;

• the Tintic Project where $3.7 million of exploration expenditure was incurred in the three months ended June 30, 2024 compared to $2.0 million incurred in the three months ended June 30, 2023.

Activities during the three months ended June 30, 2024 were focused on diamond drilling in the Mammoth area;

• the San Matias Project where $3.2 million of exploration expenditure was incurred by Cordoba Minerals for the three months ended June 30, 2024 focused on preparations for detailed engineering design of the Alacran mine;

• the Hog Heaven Project where $2.5 million of exploration expenditure was incurred in the three months ended June 30, 2024 compared to $0.4 million incurred in the three months ended June 30, 2023.

Activities during the three months ended June 30, 2024 were focused on diamond drilling in the west Flathead and Battle Butte areas.

General and administrative expenses were $10.7 million for the three months ended June 30, 2024, a decrease of $2.0 million from $12.7 million for the three months ended June 30, 2023.

The decrease was largely a result of a $1.8 million decrease in non-cash stock-based compensation expense from $4.8 million for the three months ended June 30, 2023 to $3.0 million for the three months ended June 30, 2024.

Share of loss of equity method investees was $1.5 million for the three months ended June 30, 2024, an increase of $0.8 million from $0.6 million for the three months ended June 30, 2023.

The increase in loss was largely due to our $1.1 million share of the loss from the Ma'aden joint venture three months ended June 30, 2024.

The Ma'aden joint venture was formed in July 2023.

CGI’s software licensing and data processing services to the mining and oil and gas industries represented 100.0% of our revenue for the three months ended March 31, 2024 ($0.4 million) and 100.0% for the three months ended March 31, 2023 ($0.7 million).

VRB generated no revenue during these periods.

Revenue for the three months ended June 30, 2024 was $0.5 million a decrease of $0.8 million from $1.3 million for three months ended June 30, 2023.

The sources of revenue for the periods changed significantly.

CGI’s software licensing and data processing services to the mining and oil and gas industries represented 100.0% of our revenue for the three months ended June 30, 2024 and 3.2% of our revenue for three months ended June 30, 2023 ($0.0 million).

VRB generated no revenue during the three months ended June 30, 2024 and represented 96.8% three months ended June 30, 2023 ($1.3 million).

Due to the nature of VRB's contracts, revenue is typically recognized when an energy storage system is installed and commissioned.

VRB did not complete any installations and commissionings during three months ended June 30, 2024 and therefore recorded no revenue during this period.

During the three months ended June 30, 2023, the majority of our

revenue came from VRB as it delivered, installed and commissioned a 1MW/2MWh energy storage system to a customer in China, which resulted in $1.3 million of revenue being recognized.

Three Months Ended

March 31, 2024 Three Months Ended

March 31, 2023 Percentage Change

June 30, 2024 Three Months Ended

June 30, 2023 Percentage Change

(In thousands)

3 unchanged sentences

Gross profit 346 21 1543 %

CGI’s revenue for the three months ended March 31, 2024 was $0.4 million, a decrease of $0.3 million from $0.7 million for the three months ended March 31, 2023.

The decrease in CGI’s revenue was a result of less data processing services being performed.

CGI’s gross profit for the three months ended March 31, 2024 was $0.3 million, a decrease of $0.2 million from $0.5 million for the three months ended March 31, 2023.

The percentage decrease in CGI's gross profit was consistent with the decrease in revenue.

Energy storage systems:

Revenue $ — $ 1,272 (100) %

Cost of sales — (1,235) (100) %

Gross profit — 37 (100) %

Revenue $ 538 $ 1,314 (59) %

Cost of sales (192) (1,256) (85) %

Gross profit 346 58 496 %

CGI’s revenue for the three months ended June 30, 2024 was $0.5 million, an increase of $0.5 million from $0.0 million for the three months ended June 30, 2023.

The increase in CGI’s revenue was a result of more data processing services being contracted for by customers than the prior period in 2023.

CGI’s gross profit for the three months ended June 30, 2024 was $0.3 million, an increase of $0.3 million from $0.0 million for the three months ended June 30, 2023.

The increase in CGI's gross profit was consistent with the increase in revenue.

Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023

For the six months ended June 30, 2024 we recorded a net loss attributable to common stockholders of $102.3 million ($0.85 per share), compared to $74.3 million ($0.80 per share) for the six months ended June 30, 2023, which was an increase of $28.0 million.

Significant contributors to this increase for the six months ended June 30, 2024 included an increase of $21.8 million in exploration expenditures and an increase of $3.2 million in the share of loss of equity method compared to the six months ended June 30, 2023.

Exploration expenses were $80.9 million for the six months ended June 30, 2024, an increase of $21.8 million from $59.1 million for the six months ended June 30, 2023.

Exploration expenses consisted of the following:

Six months ended June 30,

(In thousands) 2024 2023

Exploration Expenses:

Santa Cruz, USA $ 48,315 $ 29,725

Tintic, USA 7,201 3,075

San Matias, Colombia (Cordoba) 6,754 14,767

Hog Heaven, USA 5,837 1,054

Unity, USA 1,650 21

Samapleu Project, Ivory Coast 1,414 —

Carolina, USA 1,195 1,028

Bitter Creek, USA 1,186 42

White Hill, USA 331 750

Lincoln, USA 138 477

Generative exploration and other 6,876 8,171

Total $ 80,897 $ 59,110

During the six months ended June 30, 2024, exploration expenditures largely focused on activities at:

• the Santa Cruz Project where $48.3 million of exploration expenditure was incurred in the six months ended June 30, 2024 compared to $29.7 million incurred in the six months ended June 30, 2023.

Activities during the six months ended June 30, 2024 at Santa Cruz were focused on a program of infill resource drilling, geotechnical, hydrological, and metallurgical drilling/laboratory testing along with advancing permitting and technical studies required to support a prefeasibility study;

• the Tintic Project where $7.2 million of exploration expenditure was incurred in the six months ended June 30, 2024 compared to $3.1 million incurred in the six months ended June 30, 2023.

Activities during the six months ended June 30, 2024 were focused on diamond drilling in the Mammoth area;

• the San Matias Project where $6.8 million of exploration expenditure was incurred by Cordoba Minerals for the six months ended June 30, 2024 compared to $14.8 million incurred in the six months ended June 30, 2023.

Activities during the six months ended June 30, 2024 were focused on preparations for detailed engineering design of the Alacran mine;

• the Hog Heaven Project where $5.8 million of exploration expenditure was incurred in the six months ended June 30, 2024 compared to $1.1 million incurred in the six months ended June 30, 2023.

Activities during the six months ended June 30, 2024 were focused on diamond drilling in the Flathead Mine, West Flathead and Battle Butte areas.

General and administrative expenses were $23.3 million for the six months ended June 30, 2024, which was consistent with the $23.3 million incurred for the six months ended June 30, 2023.

Share of loss of equity method investees was $4.5 million for the six months ended June 30, 2024, an increase of $3.2 million from $1.2 million for the six months ended June 30, 2023.

The increase in loss was due to our $3.2 million share of the loss from the Ma'aden joint venture six months ended June 30, 2024.

The Ma'aden joint venture was formed in July 2023.

Revenue for the six months ended June 30, 2024 was $1.1 million a decrease of $0.8 million from $2.0 million for six months ended June 30, 2023.

The sources of revenue for the periods changed significantly.

CGI’s software licensing and data processing services to the mining and oil and gas industries represented 100.0% of our revenue for the six months ended June 30, 2024 ($0.9 million) and 36.2% for the six months ended June 30, 2023 ($0.7 million).

VRB generated no revenue during the six months ended June 30, 2024 and 63.8% of the revenue for the six months ended June 30, 2023 ($1.3 million.

Due to the nature of VRB's contracts, revenue is typically recognized when an energy storage system is installed and commissioned.

VRB did not complete any installations and commissionings during six months ended June 30, 2024 and therefore recorded no revenue during this period.

During the six months ended June 30, 2023, $1.3 million of our revenue came from VRB as it delivered, installed and commissioned a 1MW/2MWh energy storage system to a customer in China.

Six months ended

June 30, 2024 Six months ended

June 30, 2023 Percentage Change

(In thousands)

Software licensing and data processing services:

Revenue $ 898 $ 721 25 %

Cost of sales (292) (205) 43 %

Gross profit 606 516 17 %

Energy storage systems:

Revenue $ — $ 1,272 (100) %

Cost of sales — (1,235) (100) %

Gross profit — 37 (100) %

Revenue $ 898 $ 1,993 (55) %

Cost of sales (292) (1,440) (80) %

Gross profit 606 553 9 %

CGI’s revenue for the six months ended June 30, 2024 was $0.9 million, an increase of $0.2 million from $0.7 million for the six months ended June 30, 2023.

The increase in CGI’s revenue was a result of more data processing services being contracted for by customers than the prior period in 2023.

CGI’s gross profit for the six months ended June 30, 2024 was $0.6 million, an increase of $0.1 million from $0.5 million for the six months ended June 30, 2023.

The increase in CGI's gross profit was consistent with the increase in revenue.

Stock-Based Compensation

During the three months ended March 31, 2024, we granted 1.8 million stock options to certain directors, officers and employees of the Company at an exercise price of $13.50.

During the six months ended June 30, 2024, we granted the following stock options to certain directors, officers and employees of the Company:

• 1.8 million stock options issued on March 11, 2024 at an exercise price of $13.50.

The fair value of the option grant was determined using the Black-Scholes option-pricing model as $3.46 per share;

• 0.4 million stock options issued on April 8, 2024 at an exercise price of $13.50.

The fair value of the option grant was determined using the Black-Scholes option-pricing model as $4.72 per share.

Liquidity, Capital Resources and Capital Requirements

4 unchanged sentences

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

At March 31, 2024 and December 31, 2023, we had cash and cash equivalents of $179.4 million and $205.0 million, respectively, and a working capital of $152.6 million and $176.8 million, respectively.

Of the total cash and cash equivalents at March 31, 2024 and December 31, 2023, $30.2 million and $20.7 million, respectively, was not available for the general corporate purposes of the Company as these amounts were held by non-wholly-owned subsidiaries.

As at May 8, 2024, we believe that we will have sufficient cash resources to carry out our business plans for at least the next 12 months, after which we expect to need additional financing to further advance our projects and conduct our business.

At June 30, 2024 and December 31, 2023, we had cash and cash equivalents of $133.8 million and $205.0 million, respectively, and a working capital of $106.8 million and $176.8 million, respectively.

Of the total cash and cash equivalents at June 30, 2024 and December 31, 2023, $20.8 million and $15.0 million, respectively, was not available for the general corporate purposes of the Company as these amounts were held by non-wholly-owned subsidiaries.

As at August 7, 2024, we believe that we will have sufficient cash resources to carry out our business plans for at least the next 12 months, after which we expect to need additional financing to further advance our projects and conduct our business.

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

5 unchanged sentences

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

Cash Balances as of March 31, 2024

The table below discloses the amounts of cash disaggregated by currency denomination as of March 31, 2024 in each jurisdiction that our affiliated entities are domiciled.

Cash Balances as of June 30, 2024

The table below discloses the amounts of cash disaggregated by currency denomination as of June 30, 2024 in each jurisdiction that our affiliated entities are domiciled.

Currency by Denomination (in USD Equivalents)

5 unchanged sentences

Colombia — — — 14,878 — 14,878

Singapore 4,652 — — — — 4,652

Canada 2,537 745 — — — 3,283

France 4,403 — — — 1 4,404

Canada 2,135 1,875 — — — 4,010

Singapore 1,793 — — — — 1,793

China — — 770 — — 770

5 unchanged sentences

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

There were no cash transfers to or from our PRC subsidiaries in the form of intercompany loans during the three months ended March 31, 2024.

There were no cash transfers to or from our PRC subsidiaries in the form of intercompany loans during the six months ended June 30, 2024.

Refer to Note 17 of our consolidated financial statements in our 2023 Form 10-K which outlines other restrictions on transfers of net assets from our consolidated subsidiaries to the Company.

5 unchanged sentences

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

Three Months Ended

Six months ended June 30, 2024

Net cash (used in) provided by:

7 unchanged sentences

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

The net cash used in operating activities for the three months ended March 31, 2024 of $50.0 million primarily was the result of $43.0 million of cash exploration expenditures and $9.9 million of cash general and administrative costs.

The net cash used in operating activities for the three months ended March 31, 2023 of $30.0 million primarily was the result of $25.6 million of cash exploration expenditures and $6.4 million of cash general and administrative costs.

The net cash used in operating activities for the six months ended June 30, 2024 of $94.5 million primarily was the result of $78.8 million of cash exploration expenditures and $17.0 million of cash general and administrative costs.

cash used in operating activities for the six months ended June 30, 2023 of $65.8 million primarily was the result of $57.4 million of cash exploration expenditures and $14.0 million of cash general and administrative costs.

Investing activities

1 unchanged sentence

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

Net cash used in investing activities for the three months ended March 31, 2024 of $1.5 million was mainly attributable to $0.3 million related to payments for mineral interests, $0.7 million for the purchases of property, plant and equipment and $0.7 million for the purchase of investments that are subject to significant influence.

Net cash used in investing activities for the six months ended June 30, 2024 of $2.7 million was mainly attributable to $0.6 million related to payments for mineral interests, $1.1 million for the purchases of property, plant and equipment and $1.1 million for the purchase of investments that are subject to significant influence.

In addition, we acquired cash of $0.2 million when we commenced consolidating SNC in March 2024.

Financing activities

During the three months ended March 31, 2024, there were no significant financing activities as we continued to fund our operations with the proceeds from our September 2023 public offering.

Our subsidiary, Cordoba raised $26 million during three months ended March 31, 2024 in relation to financing its Alacran project through its strategic arrangement with JCHX.

During the six months ended June 30, 2024, there were no significant financing activities as we continued to fund our operations with the proceeds from our September 2023 public offering.

Our subsidiary, Cordoba raised $26 million during six months ended June 30, 2024 in relation to financing its Alacran project through its strategic arrangement with JCHX.

Contractual Obligations

As of March 31, 2024, there have been no material changes, outside the ordinary course of business, in our contractual obligations since December 31, 2023.

As of June 30, 2024, there have been no material changes, outside the ordinary course of business, in our contractual obligations since December 31, 2023.

Refer to Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 26, 2024, for information regarding our contractual obligations.

Off Balance Sheet Arrangements

As of March 31, 2024, we were not involved in any off-balance sheet arrangements that have or are reasonably likely to have a material effect on our financial condition, results of operations, or liquidity.

As of June 30, 2024, we were not involved in any off-balance sheet arrangements that have or are reasonably likely to have a material effect on our financial condition, results of operations, or liquidity.

Related Party Transactions

See Note 12 of our consolidated financial statements for the three months ended March 31, 2024.

See Note 12 of our consolidated financial statements for the three and six months June 30, 2024.

Critical Accounting Estimates

10 unchanged sentences

We review and evaluate exploration mineral interests for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The recoverability of our exploration mineral interests and intangible assets did not involve significant estimation in the periods presented as circumstances did not indicate the carrying amount of our assets may not be recoverable.

The recoverability of our exploration mineral interests and intangible assets did not involve significant estimation in the periods presented as circumstances did not indicate the

carrying amount of our assets may not be recoverable.

However, the recoverability of our recorded mineral interests is subject to market factors that could significantly affect the recoverability of our assets, such as commodity prices, results of exploration activities that may affect our intentions to continue under option or earn-in agreements and geopolitical circumstances, particularly in Colombia.

3 unchanged sentences

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

In March 2024, we granted 1.8 million stock options to certain directors, officers and employees of the Company at an exercise price of $13.50 per share.

The fair value of the option grants was determined using the Black-Scholes option-pricing model as $3.46.

In March 2024 and April 2024, we granted 1.8 million stock options and 0.4 million stock options, respectively, to certain directors, officers and employees of the Company at an exercise price of $13.50 per share.

The fair value of the option grants was determined using the Black-Scholes option-pricing model as $3.46 and $4.72, respectively.

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

March 11, 2024 Grant Date

March 11, 2024 Grant Date April 8, 2024 Grant Date

Risk-free interest rate 4% 4.6%

Dividend yield nil

Dividend yield nil nil

Estimated volatility 61.6% 60.1%

Expected option life 4 years

Expected option life 4 years 4 years

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

16 unchanged sentences

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

We had no uncertain tax positions as of March 31, 2024.

We had no uncertain tax positions as of June 30, 2024.

Quantitative and Qualitative Disclosures about Market Risk.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis