Item 1. Business
ITEM
1. BUSINESS
Introduction
NioCorp
Developments Ltd. (“NioCorp,” “we,” “us,” “our,” or “the Company”)
was incorporated under the laws of the Province of British Columbia under the Business Corporations Act (British Columbia) on
February 27, 1987, under the name “IPC International Prospector Corp.” On May 22, 1991, we changed our name to “Kingston
Resources Ltd.” On June 29, 2001, we changed our name to “Butler Developments Corp.” On February 12, 2009, we
changed our name to “Butler Resource Corp.” On March 4, 2010, we changed our name to “Quantum Rare Earth Developments
Corp.” On March 4, 2013, we changed our name to “NioCorp Developments Ltd.”
NioCorp
is a reporting issuer in British Columbia, Alberta, Saskatchewan, Ontario, and New Brunswick. Our registered and records office
is located at 595 Burrard Street, Suite 2600, Vancouver, British Columbia V7X 1L3 (ATTN: Blake, Cassels & Graydon LLP). Our
principal executive office is located at 7000 South Yosemite Street, Suite 115, Centennial, Colorado 80112.
Historical
Development of the Business
During
2009 and 2010, the Company commenced mineral exploration activities in the Elk Creek, Nebraska area, including negotiations with
local landowners for land access agreements. The acquisition of the carbonatite property located in Southeast Nebraska, USA (the
“Elk Creek Property”) was closed in December 2010 and involved the purchase of all of the issued and outstanding common
shares of 0859404 BC Ltd., a private British Columbia company, which in turn held 100% of the issued and outstanding shares of
Elk Creek Resources Corp., a Nebraska corporation (“Old ECRC”), and was signatory to the option agreements covering
the Elk Creek Property area. A new Canadian company, 0886338 BC Ltd. was formed to merge with 0859404 BC Ltd., and this merged
entity was subsequently amalgamated into 0896800 B.C. Ltd., a private British Columbia company and a wholly owned subsidiary of
the Company (“0896800”).
The
Company commenced a field exploration program in 2011, which included verification of previous work which was completed on the
Elk Creek Property in the 1970s and 1980s, re-assaying of historic drill core, an airborne geophysical survey and the completion
of five new diamond drillholes. The available data for the Elk Creek Property was compiled into an updated NI 43-101 resource
estimate for the Elk Creek Project, which was issued in April 2012. Additional drilling and NI 43-101 technical reports, including
resource updates and preliminary economic assessments, were completed and issued by the Company in 2014 and 2015.
During
fiscal years 2016 and 2017, the Company focused on feasibility study development, and on June 30, 2017, we announced the completion
of a NI 43-101 technical report for the Elk Creek Project (the “2017 NI 43-101 Elk Creek Technical Report”). In connection
with a review by the Ontario Securities and Exchange Commission, on December 15, 2017, the Company filed a revised 2017 NI 43-101
Elk Creek Technical Report. This revised report contained no changes to any previously reported numbers or forecasted economic
returns of the Elk Creek Project from those contained in the originally filed 2017 NI 43-101 Elk Creek Technical Report.
During
fiscal year 2019, we received a new mine design based on detailed underground engineering conducted by The Nordmin Group of Companies
(“Nordmin”) along with an updated mineral resource and mineral reserve. On April 16, 2019, we announced the results
of the updated underground mine design and supporting infrastructure, the results of an update to the Elk Creek Project, and the
filing of an NI 43-101 technical report for the Elk Creek Project based on the new mine design. During fiscal year 2020, the Company
focused efforts on advancing detailed engineering of the surface and underground facilities and negotiating the follow-on contracts
associated with the planned construction of the surface and underground features of the project, as well as obtaining a State
of Nebraska permit which describes all the prospective air emissions from a facility (the “Air Permit”). The Air Permit
required the completion of an air quality model that demonstrates compliance with the U.S. National Ambient Air Quality Standards
limits on atmospheric concentration of six pollutants that cause smog, acid rain, and other health hazards, as established by
the EPA (“NAAQS”). The final Air Permit was issued by the State of Nebraska on June 2, 2020, for the Elk Creek Project.
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During
fiscal year 2021, we obtained funding which allowed us to purchase land and mineral rights at the Elk Creek Property and continue
early project execution activities. With the acquisition of the land and mineral rights, the Company now owns the surface land
on which the Elk Creek Project’s mine infrastructure and supporting operations will be located once sufficient project financing
is obtained, along with ownership of the mineral rights to more than 90% of the Elk Creek Project’s mineral resources and
mineral reserves.
During
fiscal year 2022, we focused efforts towards refining our Elk Creek Project mineral resource and mineral reserve estimates with
respect to REEs. This work included additional assays of historical drill core to fill data gaps in the existing resource database
and re-modeling. Based on this re-interpretation of the geologic data, an update to the mine plan was also completed. Based on
this work, we issued the 2022 NI 43-101 Elk Creek Technical Report on June 28, 2022, and filed the S-K 1300 Elk Creek Technical
Report Summary as an exhibit to our Annual Report on Form 10-K for the year ended June 30, 2022.
During
fiscal year 2022, we also advanced our efforts to optimize our process design to contemplate the recovery and production of REEs,
including completion of bench and pilot scale testing on elements of the current metallurgical flowsheet. This work illustrated
that NioCorp could recover and produce high purity, fully separated magnetic rare earth products, such as neodymium-praseodymium
oxide, dysprosium oxide, and terbium oxide in addition to the niobium, scandium, and titanium products already planned for production
by the Company, once Project financing is secured and additional work has been completed on the technical and economic feasibility
of adding REEs to the Elk Creek Project’s existing planned product suite. Following the success of this testing, the Company
advanced the construction of a demonstration-scale processing plant located in Trois-Rivieres, Quebec built by the Company and
L3 Process Development (“L3”) and operated by L3 (the “Demonstration Plant”).
During
fiscal year 2023, we completed construction and operated the Demonstration Plant. The Demonstration Plant results showed higher
recoveries for our primary niobium product, much higher recoveries and a higher value titanium product in the form of titanium
tetrachloride, and a high recovery rate for the three planned rare earth oxides of consequence: neodymium/praseodymium oxide,
dysprosium oxide and terbium oxide. In addition, we completed initial site preparation work at the Elk Creek Project, which consisted
of tree and brush clearing. A geotechnical investigation at the project site was also completed, which involved excavated test
pits, geotechnical borings and the installation of shallow groundwater piezometers. The geotechnical program generated valuable
data for the firms that are working on the detailed design of the facilities and infrastructure associated with the Elk Creek
Project.
Information
regarding the Elk Creek Project is discussed below under Item 2., “Properties.”
Corporate
Structure
The
Company’s business operations are conducted primarily through ECRC (as defined below). The table below provides an overview
of the Company’s current subsidiaries and their activities.
Name
State/Province
of Formation
Ownership
Business
0896800
B.C. Ltd.
British
Columbia
100%
by the Company
The
only business of 0896800 is to hold the shares of Class A common stock of ECRC
Elk
Creek Resources Corp.
Delaware
100%
of the Class A common stock through 0896800
The
business of ECRC is the development of the Elk Creek Project
Recent
Corporate Events
The
Transactions
On
March 17, 2023 (the “Closing Date”), the Company closed a series of transactions (the “GXII Transaction”)
pursuant to the Business Combination Agreement, dated as of September 25, 2022 (the “Business Combination Agreement”),
by and among the Company, GX Acquisition Corp. II, a Delaware corporation (“GXII”), and Big Red Merger Sub Ltd., a
Delaware corporation and a direct, wholly owned subsidiary of the Company (“Merger Sub”). Pursuant to the Business
Combination Agreement, the GXII Transaction was accounted for as an equity raise
2
transaction in accordance with U.S. GAAP. At
the Closing of the GXII Transaction (the “Closing”), the following transactions occurred:
●
As
a result of a series of transactions, including, without limitation, the mergers of Merger Sub and Old ECRC with and into
GXII, with GXII surviving such mergers, GXII became an indirect, majority-owned subsidiary of NioCorp and changed its name
to “Elk Creek Resources Corp”, which we refer to as “ECRC”.
●
As
the parent company of the merged entity, NioCorp issued 1,753,821 post-Reverse Stock Split common shares of the Corporation
(the “Common Shares”) in exchange for all of the Class A shares of GXII issued and outstanding immediately prior
to the Closing, including 83,770 Common Shares issued to BTIG, LLC in exchange for Class A shares of GXII that it received
as partial payment for advisory services.
●
All
of the Class B shares of GXII issued and outstanding immediately prior to the Closing (after giving effect to the surrender
of certain Class B shares of GXII in accordance with the Sponsor Support Agreement, dated September 25, 2022 (the “Sponsor
Support Agreement”), among GX Sponsor II LLC (the “Sponsor”), GXII, the Company, and the other persons party
thereto, were converted into 7,957,404 shares of Class B common stock of GXII (now known as ECRC) as the surviving entity
of the mergers that occurred on the Closing Date as part of the GXII Transaction. Pursuant to the Business Combination Agreement,
the Sponsor Support Agreement and the Exchange Agreement, dated as of March 17, 2023 (as amended, supplemented or otherwise
modified, the “Exchange Agreement”), by and among NioCorp, ECRC and the Sponsor, after the Closing, the shares
of Class B common stock of ECRC are exchangeable into Common Shares on a one-for-one basis, subject to certain equitable adjustments,
under certain conditions. Of the issued and outstanding shares of Class B common stock of ECRC, 4,565,808 shares (the “Vested
Shares”) were vested as of the Closing Date and are exchangeable at any time, and from time to time, until the
tenth anniversary of the Closing Date (the “Ten-Year Anniversary”) and 3,391,596 shares (the “Earnout Shares”)
are exchangeable until the Ten-Year Anniversary, subject to certain vesting conditions. See Note 10 to the consolidated financial
statements included in Part II, Item 8 hereof for additional information regarding the Class B common stock of ECRC.
●
NioCorp
assumed GXII’s obligations under the agreement governing the GXII share purchase warrants (the “GXII Warrants”)
and issued an aggregate of 15,666,626 warrants (the “NioCorp Assumed Warrants”) to purchase up to an aggregate
of 17,519,864 Common Shares. The NioCorp Assumed Warrants issued at the Closing consisted of (a) 9,999,959 public NioCorp
Assumed Warrants (the “Public Warrants”) that were issued in respect of the GXII Warrants that were publicly traded
prior to the Closing and (b) 5,666,667 NioCorp Assumed Warrants (the “Private Warrants”) that were issued to the
Sponsor in respect of the GXII Warrants that it held prior to the Closing, which NioCorp Assumed Warrants were subsequently
distributed by the Sponsor to its members in connection with the Closing. See Note 11b to the consolidated financial statements
included in Part II, Item 8 hereof for additional information regarding the NioCorp Assumed Warrants.
On
the Closing Date, the Company also effected a reverse stock split (the “Reverse Stock Split”) based on one (1) post-Reverse
Stock Split Common Share for every ten (10) pre-Reverse Stock Split Common Shares issued and outstanding effectuated by the Company
on the Closing Date. Any fractional shares resulting from the Reverse Stock Split were rounded down to the nearest whole Common
Share.
As
part of the GXII Transaction, on January 26, 2023, the Company entered into definitive agreements with respect to two separate
financing packages with YA II PN, Ltd., an investment fund managed by Yorkville Advisors Global, LP (“Yorkville”),
including:
● A
Securities Purchase Agreement, dated January 26, 2023 (as amended, the “Yorkville
Convertible Debt Financing Agreement”), between the Company and Yorkville, under
which the Company issued to Yorkville unsecured convertible debentures in the original
aggregate principal amount of $16.0 million (the “Convertible Debentures”)
and Common Share purchase warrants, exercisable for up to 1,789,267 Common Shares for
cash or, if at any time there is no effective registration statement registering, or
no current prospectus available for, the resale of the underlying Common Shares, on a
cashless basis, at the option of the holder, at a price per Common Share of approximately
$8.9422, subject to adjustment to give effect to any stock dividend, stock split, reverse
stock split or similar transaction (the “Financing Warrants”), on the
3
Closing
Date, for gross proceeds of $15.36 million (the “Yorkville Convertible Debt Facility Financing”); and.
● A
Standby Equity Purchase Agreement, dated January 26, 2023 (the “Yorkville Equity
Facility Financing Agreement”), between the Company and Yorkville, under which
Yorkville agreed to purchase up to $65.0 million of Common Shares over the next three
years, at NioCorp’s direction and subject to certain restrictions (the “Yorkville
Equity Facility Financing”).
These
financing packages are further discussed below under “ Management’s Discussion and Analysis of Financial Condition
and Results of Operations – Liquidity and Capital Resources – Financing Activities .”
The
transactions contemplated by the Business Combination Agreement, including the GXII Transaction, the Yorkville Convertible Debt
Facility Financing, the Yorkville Equity Facility Financing, and the Reverse Stock Split are referred to, collectively, as the
“Transactions.”
The
number of Common Shares issued and outstanding immediately following the consummation of the Transactions were as follows:
Common
Shares
Percentage
Legacy
NioCorp Shareholders
28,246,621
93.90
%
Former GXII Class
A Shareholders 1
1,753,821
5.83
%
Other 2
81,213
0.27
%
Total Common Shares
Outstanding Upon Completion of Transactions
30,081,655
100
%
1
Includes
83,770 Common Shares issued to BTIG, LLC in exchange for Class A shares of GXII that it received as partial payment for advisory
services.
2
Represents
Commitment Shares (as defined below) issued under the Yorkville Equity Facility Financing Agreement.
After
consideration of GXII expenses incurred in connection with the Transactions, the Company acquired net cash of approximately $2.2
million and assumed net liabilities of approximately $0.4 million. We also assumed Private Warrant liabilities and the Earnout
Shares liability, which were initially recorded at their non-cash fair market value of approximately $3.0 million and approximately
$13.2 million, respectively. The Company incurred expenses related to the Transactions of approximately $6.8 million, all of which
were recorded as other operating expenses.
In
addition, in connection with the Transactions, the Common Shares and the NioCorp Assumed Warrants were listed for trading on The
Nasdaq Stock Market LLC (“Nasdaq”). The Common Shares and the NioCorp Assumed Warrants began trading on the Nasdaq
Global Market and the Nasdaq Capital Market, respectively, on March 21, 2023, under the symbols “NB” and “NIOBW,”
respectively. The Common Shares continued to trade on the Toronto Stock Exchange (the “TSX”) under the symbol “NB,”
and began trading on the Nasdaq on a post-Reverse Stock Split basis on March 21, 2023. The Common Shares ceased being quoted on
the U.S. over the counter markets in connection with the commencement of trading on the Nasdaq Global Market.
Business
Operations
NioCorp
is a mineral exploration company engaged in the acquisition, exploration, and development of mineral properties. NioCorp, through
ECRC, is developing a superalloy materials project that, if and when developed, will produce niobium, scandium, titanium, and
potentially, rare earth products. Known as the “Elk Creek Project,” it is located near Elk Creek, Nebraska, in the
southeast portion of the state.
● Niobium
is used to produce various superalloys that are extensively used in high performance
aircraft and jet turbines. It also is used in high-strength, low-alloy steel, a stronger
steel used in automobiles, bridges, structural systems, buildings, pipelines, and other
applications that generally enables those applications to be stronger and lighter in
mass. This “lightweighting” benefit often results in environmental benefits,
including reduced fuel consumption and material usage, which can result in fewer air
emissions.
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● Scandium
can be combined with aluminum to make super-high-performance alloys with increased strength
and improved corrosion resistance. Scandium also is a critical component of advanced
solid oxide fuel cells, an environmentally preferred technology for high-reliability,
distributed electricity generation.
● Titanium
is a component of various superalloys and other applications that are used for aerospace
applications, weapons systems, protective armor, medical implants and many others. It
also is used in pigments for paper, paint, and plastics.
During
fiscal year 2023, the Company completed work at its Demonstration Plant that confirmed metallurgical recoveries for magnetic rare
earth products. Additional work is needed to modify the design of the proposed surface plant to make these products and to determine
the capital cost of these modifications.
Our
primary business strategy is to advance our Elk Creek Project to commercial production. We are focused on obtaining additional
funds to carry out our near-term planned work programs associated with securing the project financing necessary to complete detailed
design, development, and construction of the Elk Creek Project.
Competitive
Business Conditions
There
is significant competition within the minerals industry to discover and acquire mineral properties considered to have commercial
potential. We compete for the opportunity to participate in promising exploration projects with other entities. In addition, we
compete with others in efforts to obtain financing to acquire and explore mineral properties, acquire and utilize mineral exploration
equipment, and hire qualified mineral exploration personnel. We may compete with other mining companies for mining claims in regions
adjacent to our existing claims, or in other parts of the world should we dedicate resources to doing so in the future. These
companies may be better capitalized than us and we may have difficulty in expanding our holdings through the staking or acquisition
of additional mining claims or other mineral tenures.
In
competing for qualified mineral exploration personnel, we may be required to pay compensation or benefits relatively higher than
those paid in the past, and the availability of qualified personnel may be limited in high-demand mining periods, such as was
the case in past years when the price of gold and other metals was higher than it is now.
Cycles
The
mining business is subject to mineral price cycles. The marketability of minerals and mineral concentrates is also affected by
worldwide economic cycles. At the present time, strong demand for some minerals in many countries is lifting commodity prices,
although it is difficult to assess how long such trends may continue. Fluctuations in supply and demand in various regions throughout
the world are common.
The
following table sets forth commodity prices for the last five calendar years for the ferroniobium, scandium trioxide and titanium
dioxide products the Company anticipates extracting from its Elk Creek Project. These pricing surveys may not be representative
of the pricing that the Company anticipates achieving for its products once commercial production begins from its Elk Creek Project.
Year
Ferroniobium
U.S. Price ($/kg-Nb) ( 1)
Sc 2 O 3
U.S. Price ($/kg) ( 2)
TiO 2
U.S. Price ($/kg) ( 3)
2022
$46
$2,100
$1.50
2021
44
2,200
1.45
2020
37
3,800
1.18
2019
39
3,900
1.15
2018
38
4,600
1.03
(1) Source:
Argus Metal Prices, average annual ending price, 2022. Ferroniobium 65% niobium content,
FOB U.S. warehouse.
(2) Source:
United States Geological Service (“USGS”) Mineral Commodity Summary, 2022.
Sc 2 O 3 , 99.99% purity, 5-kilogram (“kg”) lot size.
(3) Source:
USGS Mineral Commodity Summary, 2022. Rutile mineral concentrate, bulk, minimum 95% TiO 2 ,
f.o.b. Australia.
Based
on results of the Company’s Demonstration Plant, a higher value titanium tetrachloride product can be produced with a substantially
higher metallurgical recovery than TiO 2 . The Company is in the process of completing feasibility level cost estimates
to replace the previous TiO 2 production equipment with new equipment that would produce titanium tetrachloride.
5
As
NioCorp is a development stage issuer and has not yet generated any revenue from the operation of the Elk Creek Project, it is
not currently significantly affected by changes in commodity demand and prices, except to the extent that same impact the availability
of capital for mineral exploration and development projects. As it does not carry on production activities, NioCorp’s ability
to fund ongoing exploration is affected by the availability of financing, which is, in turn, affected by the strength of the economy
and other general economic factors.
Economic
Dependence
Other
than land and mineral right option agreements and agreements between NioCorp and third parties for the purchase and sale of products
to be produced from the Elk Creek Project (“offtake agreements”), NioCorp’s business is not substantially dependent
on any contract such as a contract to sell the major part of its product or services or to purchase the major part of its requirements
for goods, services or its raw materials, or any franchise or license or other agreement to use a patent, formula, trade secret,
process or trade name upon which its business depends.
Government
Regulation
The
exploration and development of a mining prospect is subject to regulation by a number of federal and state government authorities.
These include the United States Environmental Protection Agency (the “EPA”) and the United States Army Corps of Engineers
(the “USACE”) as well as the various state and local environmental protection agencies. The regulations address many
environmental issues relating to air, soil, and water contamination, and apply to many mining related activities including exploration,
mine construction, mineral extraction, ore milling, water use, waste disposal, and use of toxic substances. In addition, we are
subject to regulations relating to labor standards, occupational health and safety, mine safety, general land use, export of minerals,
taxation, data protection, and data security. Many of the regulations require permits or licenses to be obtained, the absence
of which and/or inability to obtain such permits or licenses will adversely affect our ability to conduct our exploration, development,
and operation activities. The failure to comply with the regulations and terms of permits and licenses may result in fines or
other penalties or in revocation of a permit or license or loss of a prospect.
General
While
none of the lands on which the Elk Creek Project is proposed to be built are owned by the U.S. Government, mining rights on public
lands are governed by the General Mining Law of 1872, as amended, which allows for the location of mining claims on certain federal
lands upon the discovery of a valuable mineral deposit and compliance with location requirements. The exploration of mining properties
and development and operation of mines is governed by both federal and state laws. Federal laws that govern mining claim location
and maintenance and mining operations on federal lands are generally administered by the Bureau of Land Management. Additional
federal laws, governing mine safety and health, also apply. State laws also require various permits and approvals before exploration,
development or production operations can begin. Among other things, a reclamation plan must typically be prepared and approved,
with financial assurance provided in the amount of projected reclamation costs. The financial assurance is used to ensure that
proper reclamation takes place and will not be released until that time. Local jurisdictions may also impose permitting requirements,
such as conditional use permits or zoning approvals.
Environmental
Regulation
Our
mineral projects are subject to various federal, state and local laws and regulations governing protection of the environment.
These laws are continually changing and, in general, are becoming more restrictive. The development, operation, closure, and reclamation
of mining projects in the U.S. requires numerous notifications, permits, authorizations, and public agency decisions. Compliance
with environmental and related laws and regulations requires us to obtain permits issued by regulatory agencies and to file various
reports and keep records of our operations. Certain of these permits require periodic renewal or review of their conditions and
may be subject to a public review process during which opposition to our proposed operations may be encountered. We are currently
operating under various permits for activities connected to mineral exploration, reclamation, and environmental considerations.
Our policy is to conduct business in a way that safeguards public health and the environment. We believe that our operations are
conducted in material compliance with applicable laws and regulations.
Changes
to current local, state, or federal laws and regulations in the jurisdictions where we operate could require additional capital
expenditures and increased operating and/or reclamation costs. Although we are unable to predict
6
what additional legislation,
if any, might be proposed or enacted, additional regulatory requirements could impact the economics of our projects.
Environmental
Regulation - U.S. Federal Laws
The
Comprehensive Environmental, Response, Compensation, and Liability Act (“CERCLA”), and comparable state statutes,
impose strict, joint, and several liability on current and former owners and operators of sites and on persons who disposed of
or arranged for the disposal of hazardous substances found at such sites. It is not uncommon for the government to file claims
requiring clean-up actions and/or demands for reimbursement for government-incurred clean-up costs or natural resource damages.
It is also not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage
allegedly caused by hazardous substances released into the environment. The Resource Conservation and Recovery Act (“RCRA”),
and comparable state statutes, govern the disposal of solid waste and hazardous waste and authorize the imposition of substantial
fines and penalties for noncompliance, as well as requirements for corrective actions. CERCLA, RCRA, and comparable state statutes
can impose liability for clean-up of sites and disposal of substances found on exploration, mining and processing sites long after
activities on such sites have been completed.
The
Clean Air Act, as amended (“CAA”), restricts the emission of air pollutants from many sources, including mining and
processing activities. Any future mining operations by the Company may produce air emissions, including fugitive dust and other
air pollutants from stationary equipment, storage facilities, and the use of mobile sources such as trucks and heavy construction
equipment, which are subject to review, monitoring and/or control requirements under the CAA and state air quality laws. New facilities
may be required to obtain permits before work can begin, and existing facilities may be required to incur capital costs in order
to remain in compliance. In addition, permitting rules may impose limitations on our production levels or result in additional
capital expenditures in order to comply with the rules.
The
National Environmental Policy Act (“NEPA”) requires federal agencies to integrate environmental considerations into
their decision-making processes by evaluating the environmental impacts of their proposed actions, including issuance of permits
to mining facilities and assessing alternatives to those actions. If a proposed action could significantly affect the environment,
the agency must prepare either a detailed statement known as an Environmental Impact Statement (“EIS”), or a less
detailed statement known as an Environmental Assessment (“EA”). The EPA, other federal agencies, and any interested
third parties can review and comment on the scope of the EIS or EA and the adequacy of any findings set forth in the draft and
final EIS or EA. This process can cause delays in issuance of required permits or result in changes to a project to mitigate its
potential environmental impacts, which can in turn impact the economic feasibility of a proposed project.
The
Clean Water Act (“CWA”), and comparable state statutes, impose restrictions and controls on the discharge of pollutants
into waters of the U.S. The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of
a permit issued by the EPA or an analogous state agency. The CWA regulates storm water from mining facilities and requires a storm
water discharge permit or Stormwater Pollution Prevention Plan for certain activities. Such a permit requires the regulated facility
to monitor and sample storm water run-off from its operations. The CWA and regulations implemented thereunder also prohibit discharges
of dredged and fill material in wetlands and other waters of the U.S. unless authorized by an appropriately issued permit. The
CWA and comparable state statutes provide for civil, criminal, and administrative penalties for unauthorized discharges of pollutants,
and impose liability on parties responsible for those discharges for the costs of cleaning up any environmental damage caused
by the release and for natural resource damages resulting from the release.
The
Safe Drinking Water Act (“SDWA”) and the Underground Injection Control (“UIC”) program promulgated thereunder,
regulate the drilling and operation of subsurface injection wells. The EPA directly administers the UIC program in some states
and in others the responsibility for the program has been delegated to the state. The program requires that a permit be obtained
before drilling a disposal or injection well. Violation of these regulations and/or contamination of groundwater by mining-related
activities may result in fines, penalties, and remediation costs, among other sanctions and liabilities under the SDWA and state
laws. In addition, third-party claims may be filed by landowners and other parties claiming damages for alternative water supplies,
property damages, and bodily injury.
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Environmental
Regulation − Nebraska
Nebraska
has a well-developed set of environmental regulations and responsible agencies but does not have clearly defined regulations with
respect to permitting mines. As such, review of the project and the issuance of permits by Nebraska agencies and regulatory bodies
could potentially impact the total time to market for our Elk Creek Project. Other Nebraska regulations govern operating and design
standards for the construction and operation of any source of air emissions and landfill operations. Any changes to these laws
and regulations could have an adverse impact on our financial performance and results of operations by, for example, requiring
changes to operating conditions, technical criteria, fees, or surety requirements. The most stringent permit related to air quality
is known as a Prevention of Significant Deterioration (“PSD”) permit, which requires the applicant to demonstrate
compliance with NAAQS and Best Available Control Technology (“BACT”) for the control of air emissions. If the facility
exceeds the potential to emit thresholds for such a permit and is thus subject to PSD requirements, permanent construction at
the project site may not begin until the responsible agency issues the PSD permit. For facilities in Nebraska with potential emissions
below PSD thresholds, a state air construction permit is needed. The state permit also requires a demonstration of compliance
with NAAQS but does not require a BACT demonstration and further allows construction at a subject facility to proceed ahead of
permit issuance through an established variance process.
Human
Capital
The
Company’s ability to continue to progress the Elk Creek Project will depend on its ability to attract and retain individuals
with (among other skills) financial, administrative, engineering, geological and mining skills, and knowledge of our industry
and targeted markets. Much of the necessary specialized skills and knowledge required by the Company as a mineral exploration
company are available from the Company’s current management team and Board of Directors. The Company retains outside consultants
if additional specialized skills and knowledge are required.
As
of June 30, 2023, we had seven full-time employees as well as one contract employee. In addition, we use consultants with specific
skills to assist with various aspects of our corporate affairs, project evaluation, due diligence, corporate governance and property
management.
Our
compensation programs are designed to align compensation of our employees with the Company’s performance and to provide
the proper incentives to attract, retain and motivate employees to achieve superior results. The structure of our compensation
programs balances competitive wages and benefits and incentive earnings for both short-term and long-term performance.
Our
priority to maintain a culture of ethical performance as a core value is reflected in the Company’s Code of Business Conduct
and Ethics (the “Code of Conduct”) and other related policies. Oversight is provided by the Company’s Board
of Directors and, for specific areas of performance, by committees of the Board of Directors. Employees are required to review
the Code of Conduct on a periodic basis. Our compensation programs also include consideration of ethical performance in determining
incentive awards.
The
Company also provides a robust suite of benefits to our employees, including 401(k) participation, medical-insurance options,
and programs to encourage and support the whole person.
Forward-Looking
Statements
This
Annual Report on Form 10-K and the exhibits attached hereto contain “forward-looking statements” within the meaning
of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and “forward-looking information” within the meaning
of applicable Canadian securities legislation (collectively, “forward-looking statements”).
Forward-looking
statements have been based upon our current business and operating plans, as approved by the Company’s Board of Directors,
and may include statements regarding the anticipated benefits of the Transactions, including NioCorp’s ability to access
the full amount of the expected net proceeds of the Yorkville Equity Facility Financing Agreement over the next three years; NioCorp’s
ability to receive a final commitment of financing from the Export-Import Bank of the United States (“EXIM”); anticipated
benefits of the listing of the Common Shares on Nasdaq; the financial and business performance of NioCorp; NioCorp’s anticipated
results and developments in the
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operations of NioCorp in future periods; NioCorp’s planned exploration activities; the adequacy
of NioCorp’s financial resources; NioCorp’s ability to secure sufficient project financing to complete construction
and commence operation of the Elk Creek Project; NioCorp’s expectation and ability to produce niobium, scandium, and titanium
at the Elk Creek Project; NioCorp’s plans to produce and supply specific products and market demand for those products;
the outcome of current recovery process improvement testing, and NioCorp’s expectation that such process improvements could
lead to greater efficiencies and cost savings in the Elk Creek Project; the Elk Creek Project’s ability to produce multiple
critical metals; the Elk Creek Project’s projected ore production and mining operations over its expected mine life; the
completion of technical and economic analyses on the potential addition of magnetic rare earth oxides to NioCorp’s planned
product suite; the exercise of options to purchase additional land parcels; the execution of contracts with engineering, procurement
and construction companies; NioCorp’s ongoing evaluation of the impact of inflation, supply chain issues and geopolitical
unrest on the Elk Creek Project’s economic model; and the creation of full time and contract construction jobs over the
construction period of the Elk Creek Project.
Forward-looking
statements are frequently, but not always, identified by words such as “expects,” “anticipates,” “believes,”
“intends,” “estimates,” “potential,” “possible,” and similar expressions, or statements
that events, conditions, or results “will,” “may,” “could,” or “should” (or the
negative and grammatical variations of any of these terms) occur or be achieved. Any statements that express or involve discussions
with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, or future events or performance
(often, but not always, using words or phrases such as “expects” or “does not expect,” “is expected,”
“anticipates” or “does not anticipate,” “plans,” “estimates,” or “intends,”
or stating that certain actions, events, or results “may,” “could,” “would,” “might,”
or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements.
Such forward-looking statements reflect the Company’s current views with respect to future events and are subject to certain
known and unknown risks, uncertainties, and assumptions. Many factors could cause actual results, performance, or achievements
to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking
statements, including, among others, risks related to the following: NioCorp’s ability to recognize the anticipated benefits
of the Transactions, including NioCorp’s ability to access the full amount of the expected net proceeds under the Yorkville
Equity Facility Financing Agreement over the next three years; unexpected costs related to the Transactions; the outcome of any
legal proceedings that may be instituted against NioCorp following closing of the Transactions; NioCorp’s ability to receive
a final commitment of financing from EXIM on the anticipated timeline, on acceptable terms, or at all; NioCorp’s ability
to continue to meet Nasdaq listing standards; NioCorp’s ability to operate as a going concern; risks relating to the Common
Shares, including price volatility, lack of dividend payments and dilution or the perception of the likelihood any of the foregoing;
NioCorp’s requirement of significant additional capital; the extent to which NioCorp’s level of indebtedness and/or
the terms contained in agreements governing NioCorp’s indebtedness or the Yorkville Equity Facility Financing Agreement
may impair NioCorp’s ability to obtain additional financing; covenants contained in agreements with NioCorp’s secured
creditors that may affect its assets; NioCorp’s limited operating history; NioCorp’s history of losses; the restatement
of NioCorp’s consolidated financial statements as of and for the fiscal years ended June 30, 2022 and 2021 and the interim
periods ended September 30, 2021, December 31, 2021, March 31, 2022, September 30, 2022 and December 31, 2022 and the impact of
such restatement on NioCorp’s future financial statements and other financial measures; the material weaknesses in NioCorp’s
internal control over financial reporting, NioCorp’s efforts to remediate such material weaknesses and the timing of remediation;
the possibility that NioCorp may qualify as a PFIC under the Code; the potential that the Transactions could result in NioCorp
becoming subject to materially adverse U.S. federal income tax consequences as a result of the application of Section 7874 and
related sections of the Code; cost increases for NioCorp’s exploration and, if warranted, development projects; a disruption
in, or failure of, NioCorp’s information technology systems, including those related to cybersecurity; equipment and supply
shortages; variations in the market demand for, and prices of, niobium, scandium, titanium and rare earth products; current and
future offtake agreements, joint ventures, and partnerships; NioCorp’s ability to attract qualified management; the effects
of global health crises on NioCorp’s business plans, financial condition and liquidity; estimates of mineral resources and
reserves; mineral exploration and production activities; feasibility study results; the results of metallurgical testing; changes
in demand for and price of commodities (such as fuel and electricity) and currencies; competition in the mining industry; changes
or disruptions in the securities markets; legislative, political or economic developments, including changes in federal and/or
state laws that may significantly affect the mining industry; the impacts of climate change, as well as actions taken or required
by governments related to strengthening resilience in the face of potential impacts from climate change; the need to obtain permits
and comply with laws and regulations and other regulatory requirements; the timing and reliability of sampling and assay data;
the possibility that actual results of work may differ from
9
projections/expectations or may not realize the perceived potential
of NioCorp’s projects; risks of accidents, equipment breakdowns, and labor disputes or other unanticipated difficulties
or interruptions; the possibility of cost overruns or unanticipated expenses in development programs; operating or technical difficulties
in connection with exploration, mining, or development activities; the management of the water balance at the Elk Creek Project
site; land reclamation requirements related to the Elk Creek Project; the speculative nature of mineral exploration and development,
including the risks of diminishing quantities of grades of reserves and resources; claims on the title to NioCorp’s properties;
potential future litigation; and NioCorp’s lack of insurance covering all of NioCorp’s operations.
Should
one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may
vary materially from those described herein. This list is not exhaustive of the factors that may affect any of the Company’s
forward-looking statements. Forward-looking statements are statements about the future and are inherently uncertain, and actual
achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking
statements due to a variety of risks, uncertainties, and other factors, including without limitation those discussed under Item
1A. “Risk Factors” below.
The
Company’s forward-looking statements contained in this Annual Report on Form 10-K are based on the beliefs, expectations,
and opinions of management as of the date of this Annual Report on Form 10-K. The Company does not assume any obligation to update
forward-looking statements if circumstances or management’s beliefs, expectations, or opinions should change, except as
required by law. For the reasons set forth above, investors should not attribute undue certainty to, or place undue reliance on,
forward-looking statements.
Available
Information
We
maintain a website at http://www.niocorp.com. Our Common Shares are currently registered under Section 12(b) of the Exchange Act,
and we are currently required to file reports on Forms 10-K, 10-Q, or 8-K. Our Annual Report on Form 10-K (which includes our
audited consolidated financial statements), Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports
filed or furnished pursuant to Sections 13(a) and 15(d) of the Exchange Act, are available on our website, free of charge, as
soon as reasonably practicable after we electronically file such reports with, or furnish those reports to, the United States
Securities and Exchange Commission (the “SEC”). The SEC maintains an internet site that contains reports, proxy and
information statements, and other information regarding issuers that file electronically with the SEC (http://www.sec.gov). We
do not intend to send security holders a printed version of our Annual Report as it will be available online.
We
maintain a Code of Conduct, a copy of which may be found on our website in the “About Us” section under the main title
“Corporate Governance.” Our Code of Conduct contains information regarding whistleblower procedures.
We
are not including the information contained on or accessible through our website or the SEC’s website as a part of, or incorporating
it by reference into, this Annual Report on Form 10-K.