Item 1. Financial Statements
Item 1. Financial Statements.
IVANHOE ELECTRIC INC.
Condensed Interim Consolidated Balance Sheets (Unaudited)
(Expressed in thousands of U.S. dollars)
June 30,
2024 December 31,
2023
Assets
Current assets:
Cash and cash equivalents $ 133,811 $ 205,043
Accounts receivable 2,618 3,326
Inventory 5,507 5,013
Prepaid expenses and deposits 5,070 3,104
147,006 216,486
Non-current assets:
Investments subject to significant influence 35,251 39,130
Other investments 2,198 2,989
Exploration mineral interests 217,166 216,290
Property, plant and equipment 8,955 6,645
Other non-current assets 5,697 5,686
Total assets $ 416,273 $ 487,226
Liabilities and Equity
Current liabilities:
Accounts payable and accrued liabilities $ 21,411 $ 19,948
Note payable, current 14,962 12,672
Due to related party — 4,000
Lease liabilities, current 1,136 699
Contract liability 2,691 2,404
40,200 39,723
Non-current liabilities:
Note payable 36,244 36,244
Convertible debt 29,596 28,372
Deferred income taxes 4,478 4,845
Lease liabilities, net of current portion 2,037 1,199
Other non-current liabilities 594 562
Total liabilities 113,149 110,945
Commitments and contingencies (Note 15)
Equity:
Common stock, par value $ 0.0001 ; 700,000,000 shares authorized; 120.4 million shares issued and outstanding as of June 30, 2024 (December 31, 2023 - 700,000,000 authorized; 120.0 million issued and outstanding)
12 12
Additional paid-in capital 795,502 777,816
Accumulated deficit ( 503,798 ) ( 401,504 )
Accumulated other comprehensive income ( 2,561 ) ( 2,073 )
Equity attributable to common stockholders 289,155 374,251
Non-controlling interests 13,969 2,030
Total equity 303,124 376,281
Total liabilities and equity $ 416,273 $ 487,226
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IVANHOE ELECTRIC INC.
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (Unaudited)
(Expressed in thousands of U.S. dollars, except for share and per share amounts)
Three Months Ended
June 30, Six months ended
June 30,
2024 2023 2024 2023
Revenue $ 538 $ 1,314 $ 898 $ 1,993
Cost of sales ( 192 ) ( 1,256 ) ( 292 ) ( 1,440 )
Gross profit 346 58 606 553
Operating expenses:
Exploration expenses 37,254 32,551 80,897 59,110
General and administrative expenses 10,694 12,658 23,295 23,291
Research and development expenses 842 2,138 1,652 3,981
Selling and marketing expenses 102 96 189 145
Loss from operations 48,546 47,385 105,427 85,974
Other expenses (income):
Interest expense, net 387 713 352 681
Foreign exchange loss (gain) 692 ( 1,312 ) 687 ( 1,473 )
Loss (gain) on revaluation of investments 431 ( 1,321 ) 702 ( 946 )
Share of loss of equity method investees 1,453 606 4,465 1,228
Other expense (income), net 12 ( 1,096 ) 9 ( 1,837 )
Loss before income taxes 51,521 44,975 111,642 83,627
Income tax recovery — ( 128 ) ( 26 ) ( 200 )
Net loss 51,521 44,847 111,616 83,427
Less loss attributable to non-controlling interests ( 4,738 ) ( 6,584 ) ( 9,322 ) ( 9,090 )
Net loss attributable to common stockholders or parent 46,783 38,263 102,294 74,337
Net loss 51,521 44,847 111,616 83,427
Other comprehensive loss , net of tax:
Foreign currency translation adjustments 329 1,271 721 1,339
Other comprehensive loss 329 1,271 721 1,339
Comprehensive loss $ 51,850 $ 46,118 $ 112,337 $ 84,766
Comprehensive loss attributable to:
Common stockholders or parent 47,021 39,086 102,782 75,206
Non-controlling interests 4,829 $ 7,032 9,555 $ 9,560
$ 51,850 $ 46,118 $ 112,337 $ 84,766
Net loss per share attributable to common stockholders
Basic and diluted $ 0.39 $ 0.41 $ 0.85 $ 0.80
Weighted-average common shares outstanding
Basic and diluted 120,337,642 93,124,994 120,292,036 93,045,066
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IVANHOE ELECTRIC INC.
Condensed Interim Consolidated Statements of Changes in Equity (Unaudited)
(Expressed in thousands of U.S. dollars, except share amounts)
Additional
paid-in
capital Accumulated
deficit Accumulated
other
comprehensive
loss Non-controlling
interest Total
Common Stock
Three months ended June 30, 2024 Shares Amount
Balance at April 1, 2024 120,306,414 $ 12 $ 790,824 $ ( 457,015 ) $ ( 2,323 ) $ 18,234 $ 349,732
Net loss — — — ( 46,783 ) — ( 4,738 ) ( 51,521 )
Other comprehensive loss — — — — ( 238 ) ( 91 ) ( 329 )
Stock options exercised 82,187 — 694 — — — 694
Stock-based compensation — — 3,969 — — 100 4,069
Non-controlling interests investment in subsidiary — — 15 — — 364 379
Other changes in non-controlling interests — — — — — 100 100
Balance at June 30, 2024 120,388,601 $ 12 $ 795,502 $ ( 503,798 ) $ ( 2,561 ) $ 13,969 $ 303,124
Six months ended June 30, 2024
Balance at January 1, 2024 120,025,264 $ 12 $ 777,816 $ ( 401,504 ) $ ( 2,073 ) $ 2,030 $ 376,281
Net loss — — — ( 102,294 ) — ( 9,322 ) ( 111,616 )
Other comprehensive loss — — — — ( 488 ) ( 233 ) ( 721 )
Issuance of common stock; Kaizen arrangement 116,413 — 952 — — — 952
Issuance of common stock; earn-in payment 12,765 — 95 — — — 95
Settlement of restricted share units 150,000 — — — — — —
Settlement of deferred share units 1,972 — — — — — —
Stock options exercised 82,187 — 694 — — — 694
Stock-based compensation — — 7,284 — — 130 7,414
Non-controlling interests investment in subsidiary — — 9,387 — — 20,992 30,379
Other changes in non-controlling interests — — ( 726 ) — — 372 ( 354 )
Balance at June 30, 2024 120,388,601 $ 12 $ 795,502 $ ( 503,798 ) $ ( 2,561 ) $ 13,969 $ 303,124
IVANHOE ELECTRIC INC.
Condensed Interim Consolidated Statements of Changes in Equity (Unaudited)
(Expressed in thousands of U.S. dollars, except share amounts)
Additional
paid-in
capital Accumulated
deficit Accumulated
other
comprehensive
loss Non-controlling
interest Total
Common Stock
Three months ended June 30, 2023 Shares Amount
Balance at April 1, 2023 92,971,865 $ 9 $ 414,897 $ ( 238,202 ) $ ( 1,235 ) $ ( 6,387 ) $ 169,082
Net loss — — — ( 38,263 ) — ( 6,584 ) ( 44,847 )
Other comprehensive loss — — — — ( 823 ) ( 448 ) ( 1,271 )
Stock options exercised 479,909 — 1,194 — — — 1,194
Stock-based compensation — — 5,365 — — 66 5,431
Settlement of deferred share units 11,990 — — — — — —
Non-controlling interests investment in subsidiary — — 17,979 — — 19,174 37,153
Other changes in non-controlling interests — — 7 — — ( 1 ) 6
Balance at June 30, 2023 93,463,764 $ 9 $ 439,442 $ ( 276,465 ) $ ( 2,058 ) $ 5,820 $ 166,748
Six months ended June 30, 2023
Balance at January 1, 2023 92,960,584 $ 9 $ 409,683 $ ( 202,128 ) $ ( 1,189 ) $ ( 3,928 ) $ 202,447
Net loss — — — ( 74,337 ) — ( 9,090 ) ( 83,427 )
Other comprehensive loss — — — — ( 869 ) ( 470 ) ( 1,339 )
Issuance of common stock; earn-in payment 10,281 — 150 — — — 150
Stock options exercised 480,909 — 1,197 — — — 1,197
Stock-based compensation — — 10,432 — — 131 10,563
Settlement of deferred share units 11,990 — — — — — —
Non-controlling interests investment in subsidiary — — 17,979 — — 19,174 37,153
Other changes in non-controlling interests — — 1 — — 3 4
Balance at June 30, 2023 93,463,764 $ 9 $ 439,442 $ ( 276,465 ) $ ( 2,058 ) $ 5,820 $ 166,748
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IVANHOE ELECTRIC INC.
Condensed Interim Consolidated Statements of Cash Flows (Unaudited)
(Expressed in thousands of U.S. dollars)
Six months ended June 30, 2024 and 2023
2024 2023
Operating activities
Net loss $ ( 111,616 ) $ ( 83,427 )
Adjustments to reconcile net loss to cash provided by used in operating activities:
Depreciation and amortization 1,335 1,714
Stock-based compensation 7,414 10,563
Non-cash exploration expense 95 1,003
Non-cash research and development expense 565 1,290
Unrealized foreign exchange loss (gain) 689 ( 1,494 )
Interest expense 3,631 2,374
Income taxes — ( 200 )
Loss (gain) on revaluation of investments 702 ( 946 )
Share of loss of equity method investees 4,465 1,228
Other 233 ( 752 )
Changes in other operating assets and liabilities:
Trade accounts receivable 805 ( 633 )
Inventory ( 527 ) 845
Operating lease liabilities ( 634 ) ( 468 )
Accounts payable and accrued liabilities 383 6,372
Other operating assets and liabilities ( 2,041 ) ( 3,299 )
Net cash used in operating activities ( 94,501 ) ( 65,830 )
Investing activities
Purchase of mineral interests ( 640 ) ( 39,157 )
Purchase of property, plant and equipment and intangible assets ( 1,176 ) ( 557 )
Purchase of investments subject to significant influence ( 1,127 ) ( 1,158 )
Cash acquired on acquisition of subsidiary 227 —
Net cash used in investing activities ( 2,716 ) ( 40,872 )
Financing activities
Non-controlling interests investment in subsidiary 26,380 29,454
Proceeds from exercise of stock options 694 1,197
Net cash provided by financing activities 27,074 30,651
Effect of foreign exchange rate changes on cash and cash equivalents ( 1,089 ) 192
Decrease in cash and cash equivalents ( 71,232 ) ( 75,859 )
Cash and cash equivalents, beginning of the year 205,043 139,660
Cash and cash equivalents, end of the period $ 133,811 $ 63,801
Supplemental cash flow information
Cash paid for income taxes $ 1,143 $ 1,166
Supplemental disclosure of non-cash investing and financing activities
Note payable issued as consideration for land purchase $ — $ 82,590
Issuance of common stock; Kaizen arrangement 952 —
Issuance of common stock; earn-in payment 95 —
Non-controlling interests investment in subsidiary 4,000 10,546
Settlement of loan upon issuance of shares of subsidiary — ( 10,546 )
Settlement of related party loan $ ( 4,000 ) $ —
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IVANHOE ELECTRIC INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Unaudited - Tabular amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
1. Background and basis of preparation:
Ivanhoe Electric Inc. (“Ivanhoe Electric” or “the Company”) is a United States 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:
• VRB Energy Inc. (“VRB”), develops, manufactures and installs vanadium flow batteries for grid-scale energy storage. Ivanhoe Electric had an ownership interest in VRB of 90.0 % as at June 30, 2024 (December 31, 2023 — 90.0 %).
• Computational Geosciences Inc. (“CGI”), provides data analytics, geophysical modeling, software licensing and artificial intelligence services for the mineral, oil & gas and water exploration industries. Ivanhoe Electric had an ownership interest in CGI of 94.3 % as at June 30, 2024 (December 31, 2023 — 94.3 %).
• Cordoba Minerals Corp. (“Cordoba”) holds the San Matias copper-gold-silver project in northern Colombia. Ivanhoe Electric had an ownership interest in Cordoba of 62.8 % as at June 30, 2024 (December 31, 2023 — 62.8 %).
The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all information and disclosures required by generally accepted accounting principles in the United States. Therefore, this information should be read in conjunction with the Company's consolidated financial statements and notes contained on its Form 10-K for the year ended December 31, 2023. The information furnished herein reflects all normal recurring entries, that are in the opinion of management, necessary for a fair statement of the results for the interim periods reported. Operating results for the six months ended June 30, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.
The condensed interim consolidated financial statements have been prepared on a going concern basis, which presumes the realization of assets and satisfaction of liabilities in the normal course of business.
References to “$” refer to United States dollars and “Cdn$” to Canadian dollars.
2. Significant accounting policies:
The Company discloses in its consolidated financial statements for the year ended December 31, 2023, those accounting policies that it considers significant in determining its results of operations and financial position. There have been no material changes to, or in the application of, the accounting policies previously identified and described in the Company’s consolidated financial statements for the year ended December 31, 2023.
Recent accounting pronouncements not yet adopted:
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.
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IVANHOE ELECTRIC INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Unaudited - Tabular amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
In November 2023, the FASB issued ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The update was issued to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The Company is required to adopt ASU 2023-07 on January 1, 2025 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 .
3. Use of estimates:
The preparation of consolidated financial statements requires management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, the related disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual results may differ from these estimates.
The significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended December 31, 2023.
4. Cash and cash equivalents:
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 it was held by non-wholly-owned subsidiaries.
At June 30, 2024, the Company has $ 1.7 million in cash equivalents in the form of redeemable short-term investments (December 31, 2023 - $ 0.0 million ) .
5. Investments subject to significant influence:
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”) and Go2Lithium Inc. ("Go2Lithium").
Equity Method Carried at fair value
Ma'aden Joint Venture SNC
(Note a) Go2Lithium Other Sama Total
Balance at December 31, 2023 $ 31,606 $ 896 $ 2,469 $ — $ 4,159 $ 39,130
Change in fair value — — — — 42 42
Investment — 440 — 687 — 1,126
Share of loss ( 3,188 ) ( 827 ) ( 419 ) ( 30 ) — ( 4,465 )
Acquisition — ( 489 ) — — — ( 489 )
Foreign currency translation — ( 20 ) ( 75 ) — — ( 95 )
Balance at June 30, 2024 $ 28,418 $ — $ 1,975 $ 657 $ 4,201 $ 35,251
(a) Acquisition of Sama Nickel Corporation:
On March 11, 2024, the Company completed its earn-in and acquired an additional 30 % in Sama Nickel Corporation ("SNC") bringing its total ownership interest in SNC to 60 % . SNC owns the Samapleu-Grata Nickel-Copper Project ("Samapleu Project") in the Ivory Coast. The Company determined that it acquired control of SNC and commenced consolidating the results of SNC from March 11, 2024 under the voting interest entity model. The acquisition was accounted for as an asset acquisition as SNC did not meet the definition of a business. The cost of the acquisition has been allocated to the assets and liabilities of SNC, including its exploration property in the Ivory Coast.
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IVANHOE ELECTRIC INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Unaudited - Tabular amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
6. Exploration properties:
Santa
Cruz Tintic San Matias Other Total
Balance at December 31, 2023 $ 166,492 $ 30,663 $ 15,315 $ 3,820 $ 216,290
Acquisition costs 300 40 — 529 869
Foreign currency translation — — — 7 7
Balance at June 30, 2024 $ 166,792 $ 30,703 $ 15,315 $ 4,356 $ 217,166
7. Note payable:
Note payable
Balance at December 31, 2023 $ 48,916
Interest expense 2,290
Balance at June 30, 2024 $ 51,206
Current portion 14,962
Non-current portion 36,244
Balance at June 30, 2024 $ 51,206
In May 2023, the Company issued a secured promissory note in the amount of $ 82.6 million as part of a land acquisition at its Santa Cruz project. 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.
8. Convertible debt:
VRB
Convertible
Bond
Balance at December 31, 2023 $ 28,372
Interest expense 1,224
Balance at June 30, 2024 $ 29,596
On July 8, 2021, VRB issued a convertible bond for gross proceeds of $ 24.0 million. The bond has a five-year term and interest accrues at a rate of 8 % per annum.
Prior to the maturity date, the convertible bond is automatically converted into equity of VRB upon an equity financing or sale event, at a price per share equal to the lower of:
• the transaction price of the equity financing or sale event; and
• the valuation cap price of $ 158.0 million divided by the total shares outstanding at the time of the event.
If no equity financing or sale event occurs, VRB must repay the outstanding principal and interest on maturity.
The Company has accounted for the convertible bond, including its embedded features, as a debt instrument accounted at amortized cost, as it was determined the embedded features are not required to be bifurcated.
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IVANHOE ELECTRIC INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Unaudited - Tabular amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
9. Equity:
(a) Common stock transactions:
On February 6, 2024, Ivanhoe Electric acquired all of the issued and outstanding common shares of Kaizen Discovery Inc. (“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 82.5 % of the issued and outstanding common shares of Kaizen on a non-diluted basis. Following the closing of the Arrangement, Ivanhoe Electric beneficially owns 100 % of the issued and outstanding common shares of Kaizen 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.
(b) Stock-based compensation:
Stock-based payment compensation was allocated to operations as follows:
Three Months Ended June 30, Six months ended June 30,
2024 2023 2024 2023
General and administrative expenses $ 2,987 $ 4,759 $ 5,677 $ 8,958
Exploration expenses 1,082 667 1,737 1,595
Research and development expenses — 5 — 5
Cost of sales — — — 5
$ 4,069 $ 5,431 $ 7,414 $ 10,563
(i) Stock options:
During the six months ended June 30, 2024 Company granted stock options to certain directors, officers and employees of the Company. The options have a seven-year term and comprise three equal tranches vesting in one-third annual increments beginning one year from the grant date.
Information related to stock options granted during the six months ended June 30, 2024 is presented below.
Grant date:
March 11, 2024 April 8, 2024
Exercise price $ 13.50 $ 13.50
Number of options granted 1,801,234 415,170
Weighted average assumptions used to value stock option awards:
Expected volatility 61.6 % 60.1 %
Expected life of options (in years) 4 4
Expected dividend rate 0 % 0 %
Risk-free interest rate 4.23 % 4.56 %
Weighted average grant-date fair value (per option) $ 3.46 $ 4.72
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IVANHOE ELECTRIC INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Unaudited - Tabular amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
10. Revenue:
The Company recognized revenue from the following sources:
Three Months Ended June 30, Six months ended June 30,
Revenue type 2024 2023 2024 2023
Software licensing $ — $ — $ — $ 400
Data processing services 538 42 898 321
Renewable energy storage systems (Note a) — 1,272 — 1,272
Total $ 538 $ 1,314 $ 898 $ 1,993
(a) At June 30, 2024, the Company had a contract liability of $ 2.7 million (December 31, 2023 — $ 2.4 million) relating to the sale of renewable energy storage systems.
11. Exploration expense:
Three Months Ended June 30, Six months ended June 30,
Project 2024 2023 2024 2023
Santa Cruz, USA $ 20,478 $ 15,043 $ 48,315 $ 29,725
Tintic, USA 3,681 1,954 7,201 3,075
San Matias, Colombia (Cordoba) 3,236 10,109 6,754 14,767
Hog Heaven, USA 2,530 416 5,837 1,054
Unity, USA 1,552 — 1,650 21
Samapleu Project, Ivory Coast (Note 5(a)) 1,414 — 1,414 —
Carolina, USA 300 790 1,195 1,028
Bitter Creek, USA 528 15 1,186 42
White Hill, USA 94 259 331 750
Lincoln, USA 8 182 138 477
Generative exploration and other 3,433 3,783 6,876 8,171
Total $ 37,254 $ 32,551 $ 80,897 $ 59,110
12. Related party transactions:
Related parties include entities with common direct or indirect shareholders and/or directors. Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions.
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IVANHOE ELECTRIC INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Unaudited - Tabular amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
The following table summarizes transactions between the Company and significant related parties.
Balance outstanding as at Transactions for the
three months ended
June 30, Transactions for the
six months ended
June 30,
June 30,
2024 December 31,
2023 2024 2023 2024 2023
Total expenses and accounts payable
Global Mining (Note a) 239 224 1,018 4,897 2,381 9,213
Ivanhoe Capital Aviation (Note b) — — 250 250 500 500
I-Pulse (Note c) 1,046 1,395 430 1,158 826 2,315
Total 1,285 1,619 1,698 6,305 3,707 12,028
Revenue and accounts receivable
Ma'aden Joint Venture (Note d) 100 — 363 — 663 —
Advances
Global Mining (Note a) 1,009 1,169 — — — —
Ma'aden Joint Venture (Note d) 948 1,254 — — — —
Deposit
I-Pulse (Note c) 4,165 4,233 — — — —
Loan
JCHX Mining Management Co., Ltd (Note e) — 4,000 — — — —
Transactions for the
three months ended
June 30, Transactions for the six
months ended
June 30,
2024 2023 2024 2023
Expense classification
Exploration expenses 370 3,290 789 6,332
General and administrative expenses 1,021 2,357 2,328 4,388
Research and development expenses 307 658 590 1,308
1,698 6,305 3,707 12,028
(a) Global Mining Management Corp. (“Global Mining”) is a private company based in Vancouver, Canada, that provides administration, accounting, and other office services to the Company on a cost-recovery basis. The Company held 6.7 % of Global Mining’s outstanding common stock at June 30, 2024 (December 31, 2023 — 7.1 %). The advance provided to Global Mining is included in other non-current assets.
(b) Ivanhoe Capital Aviation (“ICA”) is an entity beneficially owned by the Company’s Executive Chairman. ICA provides use of its aircraft to the Company.
(c) I-Pulse is a shareholder of the Company. On October 24, 2022, the Company entered into an agreement with I-Pulse, to purchase six Typhoon™ transmitters to be delivered in stages over approximately three years . The total purchase price for the six Typhoon™ transmitters is $ 12.4 million, which includes research and development costs of $ 2.8 million. The agreement also includes 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 and recorded in other non-current assets. The remaining payments will be made as each Typhoon™ transmitter system is
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IVANHOE ELECTRIC INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Unaudited - Tabular amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
delivered. In December 2023, the Company received the first Typhoon™ transmitter that was deliverable under the agreement.
(d) The Company's majority owned subsidiary, CGI, provides geophysical data processing services to the Ma'aden joint venture and recognized revenue totaling $ 0.7 million.
At June 30, 2024 the Company has $ 0.9 million in accounts receivable owed by the Ma'aden joint venture for costs that the Company incurred on behalf of the Ma’aden Joint Venture related to exploration work in Saudi Arabia.
(e) JCHX Mining Management Co., Ltd (“JCHX") held 19.8 % of Cordoba’s issued and outstanding common stock as at June 30, 2024 (December 31, 2023 - 19.8 %).
In November 2023, $ 4.0 million was advanced to Cordoba by JCHX. In January 2024, Cordoba announced receipt of the second installment of $ 40.0 million relating to the strategic arrangement entered into with JCHX in May 2023. The $ 4.0 million loan was settled in full by applying it towards the second installment received as a payment in kind.
13. Fair value measurement:
The following table provides the valuation hierarchy classification of assets and liabilities that are recorded at fair value and measured on a recurring basis in the combined balance sheets:
June 30, 2024 December 31, 2023
Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Financial assets:
Investments subject to significant influence 4,201 — — 4,159 — —
Other investments 1,448 750 — 2,239 750 —
Total financial assets $ 5,649 $ 750 $ — $ 6,398 $ 750 $ —
Financial liabilities:
Total financial liabilities $ — $ — $ — $ — $ — $ —
There were no movements in level three instruments for the three months ended June 30, 2024.
14. Segment reporting:
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 that it has three reportable segments. The Company’s reportable segments are critical metals, data processing and energy storage.
Critical metals is focused on mineral project exploration and development with a focus on identifying and developing mineral projects, and ultimately mines, associated with the metals necessary for electrification.
The data processing segment provides data analytics, geophysical modeling and artificial intelligence services for the mineral, oil & gas and water exploration industries.
The energy storage segment develops, manufactures and installs vanadium flow batteries for grid-scale energy storage.
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IVANHOE ELECTRIC INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Unaudited - Tabular amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
Segment information for the periods presented is as follows:
Three Months Ended June 30, 2024 Six months ended June 30, 2024
Critical
Metals Data
Processing Energy
Storage Total Critical
Metals Data
Processing Energy
Storage Total
Revenue $ — $ 538 $ — $ 538 $ — $ 898 $ — $ 898
Intersegment revenues — 29 — 29 — 148 — 148
Loss (income) from operations 46,742 ( 67 ) 1,871 48,546 101,807 ( 124 ) 3,744 105,427
Segment assets 398,774 4,777 12,722 416,273 398,774 4,777 12,722 416,273
Three Months Ended June 30, 2023 Six months ended June 30, 2023
Critical
Metals Data
Processing Energy
Storage Total Critical
Metals Data
Processing Energy
Storage Total
Revenue $ — $ 42 $ 1,272 $ 1,314 $ — $ 721 $ 1,272 $ 1,993
Intersegment revenues — 15 — 15 — 63 — 63
Loss (income) from operations 44,648 746 1,991 47,385 80,807 1,145 4,022 85,974
Segment assets 293,234 4,253 12,274 309,761 293,234 4,253 12,274 309,761
15. Commitments and contingencies:
The Company has entered into a contractual arrangement to purchase six Typhoon™ transmitters from I-Pulse (Note 12).
In the ordinary course of business, the Company may be involved in various legal proceedings and subject to claims that arise. Although the results of litigation and claims are inherently unpredictable and uncertain, the Company is not currently a party to any legal proceedings the outcome of which, if determined adversely to it, are believed to, either individually or taken together, have a material adverse effect on the Company’s business, financial condition or results of operations.
14
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.