NIOCORP DEVELOPMENTS LTD 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 59 Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors NioCorp Developments Ltd. Centennial, Colorado Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of NioCorp Developments, Ltd. (the “Company”) as of June 30, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, shareholders’ (deficit) equity and redeemable noncontrolling interest, and cash flows for each of the three years in the period ended June 30, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at June 30, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2023 , in conformity with accounting principles generally accepted in the United States of America. Going Concern Uncertainty The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 4 to the consolidated financial statements, the Company has an accumulated deficit and suffered recurring losses without any current revenue generating operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 4. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. 60 Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate. Certain Financing Transactions As described in Notes 1 and 9 to the consolidated financial statements, the Company entered into the following financing transactions during the year ended June 30, 2023: ● On September 25, 2022, the Company and Lind Global Asset Management III, LLC (“Lind”) entered into the waiver and consent agreement (the “Lind Consent”). As consideration for entering into the Lind Consent, Lind received, amongst other things: the right to receive a cash payment; and the right to receive additional warrants (the “Contingent Consent Warrants”) if certain contingencies are met on the date that is 18 months following the closing date. ● On January 26, 2023, the Company entered into a definitive agreement with YA II PN, Ltd., an investment fund managed by Yorkville Advisors Global, LP (together with YA II PN, Ltd., “Yorkville”). Pursuant to the definitive agreement, at the closing, Yorkville advanced a total amount of $15.36 million to the Company in consideration for $16 million aggregate principal amount of unsecured convertible debentures (the “Yorkville Convertible Debt”) and common share purchase warrants (the “Financing Warrants”). We identified the accounting treatment of these transactions and the inputs and valuation model used in estimating the fair value of the Contingent Consent Warrants as a critical audit matter. The principal considerations for our determination were: (i) the evaluation of the accounting treatment for the Lind Consent as to whether this agreement resulted in a debt modification or extinguishment based on the analysis of cash flows, (ii) the evaluation of the potential derivatives that may require bifurcation from the Yorkville Convertible Debt and evaluation of the appropriate accounting treatment, and (iii) the evaluation of the inputs and valuation model used in estimating the fair value of the Contingent Consent Warrants. Auditing these elements involved especially challenging auditor judgment due to the nature and extent of 61 audit effort required to address these matters, including the extent of specialized skills or knowledge needed. The primary procedures we performed to address this critical audit matter included: ● Reviewing and analyzing the terms of the agreements associated with each transaction. ● Reviewing and analyzing the changes in cash flows for the Lind financing transaction. ● Utilizing personnel with specialized knowledge and skills in the relevant technical accounting guidance to assist in: (i) evaluating relevant contract terms of the financing transactions in relation to the appropriate accounting literature, and (ii) assessing the appropriateness of conclusions reached by the Company. ● Utilizing personnel with specialized knowledge and skill to assist in analyzing the Company’s inputs and valuation model used in estimating the fair value for the Contingent Consent Warrants. GX Acquisition Corp. II Transaction As discussed in Notes 1, 5, 10, and 11 on March 17, 2023 (the “Closing Date”), the Company closed the GXII Transaction with GX Acquisition Corp. II (“GXII”), pursuant to the Business Combination Agreement, dated September 25, 2022 (the “Business Combination Agreement”). In connection with the closing, pursuant to the Business Combination Agreement, the Company assumed the GXII Warrant Agreement and each GXII Warrant thereunder that was issued and outstanding immediately prior to the Closing Date was converted into one Company assumed warrant. The Company’s private warrants are required to be accounted for as a liability and are subject to remeasurement at each balance sheet date, with a June 30, 2023 value of $3.3 million. Certain shares of Class B common stock of Elk Creek Resource Corporation (“ECRC”) (the “Earnout Shares”) are subject to certain vesting conditions. The Earnout Shares are required to be accounted for as a liability and are subject to remeasurement at each balance sheet date, with a June 30, 2023 value of $10.5 million. We identified the accounting treatment of the GXII Transaction and the inputs and valuation models used in estimating the fair value of the private warrants and Earnout Shares included in the GXII Transaction as a critical audit matter. The principal considerations for our determination were: (i) the evaluation of the accounting treatment for the GXII Transaction, including the accounting for the private warrants and Earnout Shares, and (ii) the evaluation of the inputs and valuation models used in estimating the fair value of both the private warrants and Earnout Shares. Auditing these elements involved especially challenging auditor judgment 62 due to the nature and extent of audit effort required to address these matters, including the extent of specialized skills or knowledge needed. The primary procedures we performed to address this critical audit matter included: ● Reviewing and analyzing the terms of the agreements associated with the GXII Transaction. ● Utilizing personnel with specialized knowledge and skills in the relevant technical accounting guidance to assist in: (i) evaluating relevant contract terms in relation to the appropriate accounting literature, and (ii) assessing the appropriateness of conclusions reached by the Company. ● Utilizing personnel with specialized knowledge and skill to assist in analyzing the Company’s inputs and valuation models used in estimating the fair value for both the private warrants and Earnout Shares. /s/ BDO USA, P.C. We have served as the Company's auditor since 2015. Spokane, Washington October 6, 2023 63 NioCorp Developments Ltd. Consolidated Balance Sheets (expressed in thousands of U.S. dollars, except share data) As of June 30, Note 2023 2022 ASSETS Current Cash and cash equivalents $ 2,341 $ 5,280 Prepaid expenses and other 1,385 402 Total current assets 3,726 5,682 Non-current Deposits 35 35 Investment in equity securities 9 10 Right-of-use assets 14 236 94 Land and buildings, net 6 839 850 Mineral properties 7 16,085 16,085 Total assets $ 20,930 $ 22,756 LIABILITIES Current Accounts payable and accrued liabilities 8 $ 3,491 $ 817 Related party loan 12 - 2,000 Convertible debt, current portion 9 - 2,169 Operating lease liability 14 71 82 Total current liabilities 3,562 5,068 Non-current Convertible debt 9 10,561 - Warrant liabilities, at fair value 9, 11c 4,989 - Earnout liability, at fair value 10 10,521 - Operating lease liability 14 164 23 Total liabilities 29,797 5,091 Commitments and contingencies 3k, 13 Redeemable noncontrolling interest 10 2,100 - SHAREHOLDERS’ (DEFICIT) EQUITY Common stock, no par value, unlimited shares authorized; 31,202,131 and 27,667,060 shares outstanding as of June 30, 2023 and 2022, respectively 11 140,421 129,055 Accumulated deficit ( 150,477 ) ( 110,397 ) Accumulated other comprehensive loss ( 911 ) ( 993 ) Total shareholders’ (deficit) equity ( 10,967 ) 17,665 Total liabilities, redeemable noncontrolling interest, and shareholders’ (deficit) equity $ 20,930 $ 22,756 The accompanying notes are an integral part of these consolidated financial statements 64 NioCorp Developments Ltd. Consolidated Statements of Operations and Comprehensive Loss (expressed in thousands of U.S. dollars, except share and per share data) For the year ended June 30, Note 2023 2022 2021 Operating expenses Employee related costs $ 2,323 $ 2,150 $ 1,655 Professional fees 2,581 684 386 Exploration expenditures 13 5,348 3,309 1,056 Other operating expenses 27,158 1,653 995 Total operating expenses 37,410 7,796 4,092 Change in fair value of earnout shares liability 10 ( 2,674 ) - - Change in fair value of warrant liabilities 9,11c 1,414 - - Loss on debt extinguishment 9 1,922 - 163 Interest expense 9,12 2,336 2,827 1,543 Foreign exchange loss (gain) 216 258 ( 725 ) Other gains ( 13 ) - ( 208 ) Change in financial instrument fair value - - ( 32 ) Loss (gain) on equity securities 1 6 ( 9 ) Loss before income taxes 40,612 10,887 4,824 Income tax benefit 15 ( 304 ) - - Net loss 40,308 10,887 4,824 Net loss attributable to redeemable noncontrolling interest 10 228 - - Net loss attributable to the Company $ 40,080 $ 10,887 $ 4,824 Other comprehensive loss: Net loss $ 40,308 $ 10,887 $ 4,824 Other comprehensive (gain) loss: Reporting currency translation ( 82 ) ( 166 ) 804 Total comprehensive loss 40,226 10,721 5,628 Comprehensive loss attributable to redeemable noncontrolling interest 228 - - Comprehensive loss attributable to the Company $ 39,998 $ 10,721 $ 5,628 Loss per common share, basic and diluted 3o $ 1.34 $ 0.41 $ 0.20 Weighted average common shares outstanding 28,705,840 26,373,722 24,196,711 The accompanying notes are an integral part of these consolidated financial statements 65 NioCorp Developments Ltd. Consolidated Statements of Cash Flows (expressed in thousands of U.S. dollars) For the year ended June 30, Note 2023 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES Net loss for the period $ ( 40,308 ) $ ( 10,887 ) $ ( 4,824 ) Adjustments for: Initial valuation of earnout shares liability 13,195 - - Change in valuation of earnout shares liability ( 2,674 ) - - Initial valuation of warrant liabilities 2,987 - - Accretion of convertible debt 2,157 2,619 1,100 Share-based compensation 1,794 1,745 797 Loss on debt extinguishment 1,422 - 163 Change in valuation of warrant liabilities 1,414 - - Yorkville share issuances 663 - - Foreign exchange loss (gain) 200 329 ( 661 ) Depreciation 3 3 - Unrealized loss (gain) on equity securities 1 6 ( 9 ) Noncash lease activity ( 12 ) ( 7 ) 30 Other gains 6 ( 13 ) - ( 196 ) Change in financial instrument fair value - - ( 32 ) Total ( 19,171 ) ( 6,192 ) ( 3,632 ) Change in working capital items: Prepaid expenses ( 985 ) ( 377 ) 9 Accounts payable and accrued liabilities 2,861 419 ( 1,103 ) Net cash used in operating activities ( 17,295 ) ( 6,150 ) ( 4,726 ) CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of mineral rights - - ( 5,468 ) Acquisition of land and buildings - ( 16 ) ( 837 ) Proceeds from sale of assets 21 - - Net cash provided by (used in) investing activities 21 ( 16 ) ( 6,305 ) CASH FLOWS FROM FINANCING ACTIVITIES Issuance of convertible debt, net of costs 14,857 - 9,477 Proceeds from issuance of capital stock 2,499 4,737 10,677 Related party debt draws 1,130 - - Related party debt repayments ( 3,130 ) ( 318 ) ( 1,500 ) Loan repayments ( 515 ) - ( 406 ) Share issue costs ( 204 ) ( 118 ) ( 174 ) Net cash provided by financing activities 14,637 4,301 18,074 Exchange rate effect on cash and cash equivalents ( 302 ) ( 172 ) ( 33 ) Change in cash and cash equivalents during period ( 2,939 ) ( 2,037 ) 7,010 Cash and cash equivalents, beginning of period 5,280 7,317 307 Cash and cash equivalents, end of period $ 2,341 $ 5,280 $ 7,317 Supplemental cash flow information: Amounts paid for interest $ 264 $ 252 $ 873 Amounts paid for income taxes - - - Non-cash investing and financing transactions: Conversion of debt for common shares $ 5,175 $ 8,807 $ 3,106 Recognition of operating lease liabilities 199 - 231 Derecognition of operating lease liabilities - - (22 ) Accounts payable to note conversion - - 1,640 Value of warrants issued 3,337 - 1,795 The accompanying notes are an integral part of these consolidated financial statements 66 NioCorp Developments Ltd. Consolidated Statements of Shareholders’ (Deficit) Equity and Redeemable Noncontrolling Interest (expressed in thousands of U.S. dollars, except share data) Common Shares Outstanding Common Stock Accumulated Deficit Accumulated Other Comprehensive Income Total Redeemable Noncontrolling Interest Balance, June 30, 2020 23,592,571 $ 97,682 $ ( 94,686 ) $ ( 355 ) $ 2,641 $ - Exercise of warrants 910,628 5,338 - - 5,338 - Exercise of options 295,229 215 - - 215 - Fair value of warrants granted - 1,795 - - 1,795 - Private placement – May 2021 433,415 5,124 - - 5,124 - Debt conversions 406,151 3,106 - - 3,106 - Share issuance costs - ( 175 ) - - ( 175 ) - Share-based compensation - 797 - - 797 - Reporting currency presentation - - - ( 804 ) ( 804 ) - Loss for the year - - ( 4,824 ) - ( 4,824 ) - Balance, June 30, 2021 25,637,994 $ 113,882 $ ( 99,510 ) $ ( 1,159 ) $ 13,213 $ - Exercise of warrants 87,175 543 - - 543 - Exercise of options 205,153 483 - - 483 - Fair value of warrants granted - 14 - - 14 - Private placement – June 2022 498,103 3,711 - - 3,711 - Debt conversions 1,238,635 8,807 - - 8,807 - Share issuance costs - ( 130 ) - - ( 130 ) - Share-based compensation - 1,745 - - 1,745 - Reporting currency presentation - - - 166 166 - Loss for the year - - ( 10,887 ) - ( 10,887 ) - Balance, June 30, 2022 27,667,060 $ 129,055 $ ( 110,397 ) $ ( 993 ) $ 17,665 $ - Exercise of options 265,138 11 - - 11 - Fair value of warrants granted - 3,338 - - 3,338 - Common Shares issued in the GXII Transaction 1,753,821 - - - - - Commitment shares issued 81,213 650 - - 650 - Registered direct offering – May 2023 314,465 2,000 - - 2,000 - Shares issued under the Yorkville equity facility 100,000 501 - - 501 - Debt conversions 1,020,434 5,604 - - 5,604 - Share issuance costs - ( 204 ) - - ( 204 ) - Redeemable noncontrolling interest - ( 2,328 ) - - ( 2,328 ) 2,328 Share-based compensation - 1,794 - - 1,794 - Reporting currency presentation - - - 82 82 - Loss for the year - - ( 40,080 ) - ( 40,080 ) ( 228 ) Balance, June 30, 2023 31,202,131 $ 140,421 $ ( 150,477 ) $ ( 911 ) $ ( 10,967 ) $ 2,100 The accompanying notes are an integral part of these consolidated financial statements 67 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) 1. DESCRIPTION OF BUSINESS NioCorp Developments Ltd. (the “Company” or “NioCorp”) was incorporated on February 27, 1987, under the laws of the Province of British Columbia and currently operates in one reportable operating segment consisting of exploration and development of mineral deposits in North America, specifically, the Elk Creek Niobium/Scandium/Titanium property (the “Elk Creek Project”) located in southeastern Nebraska. As further discussed in Notes 5, 9, 10, and 11, on March 17, 2023 (the “Closing Date”), the Company closed the GXII Transaction (as defined below) with GX Acquisition Corp. II (“GXII”), pursuant to the Business Combination Agreement, dated September 25, 2022 (the “Business Combination Agreement”), among the Company, GXII and Big Red Merger Sub Ltd (the “Closing”). At the Closing, the Company also closed convertible debt financings (the “Yorkville Convertible Debt Financing”) with YA II PN, Ltd., an investment fund managed by Yorkville Advisors Global, LP (together with YA II PN, Ltd., “Yorkville”), and the standby equity purchase facility with Yorkville (the “Yorkville Equity Facility Financing” and, together with the Yorkville Convertible Debt Financing, the “Yorkville Financings”) became effective. The transactions contemplated by the Business Combination Agreement, including the GXII Transaction, the Yorkville Financings and the Reverse Stock Split (as defined below), are referred to, collectively, as the “Transactions.” The GXII Transaction is being accounted for as an equity raise transaction in accordance with generally accepted accounting principles of the United States of America (“U.S. GAAP”). Under this method of accounting, GXII is treated as the “acquired” company for financial reporting purposes. Accordingly, the GXII Transaction is treated as the equivalent of NioCorp issuing common shares, no par value, of the Company (“Common Shares”) for the assets and liabilities of GXII. The net assets of GXII are stated at historical cost, with no goodwill or other intangible assets recorded. These consolidated financial statements have been prepared on a going concern basis that contemplates the realization of assets and discharge of liabilities at their carrying values in the normal course of business for the foreseeable future. These consolidated financial statements do not reflect any adjustments that may be necessary if the Company is unable to continue as a going concern. The Company currently earns no operating revenues and will require additional capital in order to advance the Elk Creek Project to construction and commercial operation. As further discussed in Note 4, these matters raised substantial doubt about the Company’s ability to continue as a going concern, and the Company is dependent upon the generation of profits from mineral properties, obtaining additional financing and maintaining continued support from its shareholders and creditors. 2. BASIS OF PREPARATION a) Basis of Preparation and Consolidation These consolidated financial statements have been prepared in conformity with U.S. GAAP and the rules and regulations of the U.S. Securities and Exchange Commission. The consolidated financial statements include the consolidated accounts of the Company and its wholly owned subsidiaries with all significant intercompany transactions eliminated. Certain transactions include reference to Canadian dollars (“C$”) where applicable. 68 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) These consolidated financial statements include the accounts of the Company and the subsidiaries listed in the following table. All intercompany transactions and balances have been eliminated. Schedule of intercompany transactions and balances Jurisdiction of incorporation Ownership at June 30, 2023 2022 0896800 BC Ltd. (“0896800”) British Columbia, Canada 100 % 100 % Elk Creek Resources Corp. Nebraska, USA N/A 100 % by 0896800 Elk Creek Resources Corp. (“ECRC”) Delaware, USA 100 % of the Class A common stock by 0896800 N/A b) Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuations, convertible debt valuations, earnout valuation, warrant liabilities, and share-based compensation. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between estimates and the actual results, future results of operations will be affected. 3. SIGNIFICANT ACCOUNTING POLICIES a) Development Stage Issuer The Company is considered to be a development stage issuer under Subpart 1300 of Regulation S-K of the United States Securities Act of 1933, as amended (“S-K 1300”), and it devotes substantially all of its efforts to acquiring and exploring mining interests that management believes should eventually provide sufficient net profits to sustain the Company’s existence. Until such interests are engaged in commercial production, the Company will continue to seek additional funding to support the completion of its exploration and development activities. The Company’s activities are subject to significant risks and uncertainties, including its ability to secure sufficient funding to continue operations, to obtain proven and probable reserves, to comply with industry regulations and obtain permits necessary for development of the Elk Creek Project, as well as environmental risks and market conditions. b) Cash and Cash Equivalents Cash and cash equivalents include cash on hand, cash in banks, investments in certificates of deposit with original maturities of 90 days or less, and money market funds. The Company maintains the majority of its cash balances with two financial institutions. Accounts at banks in the United States (“U.S.”) are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250, while accounts at banks in Canada are insured by the Canada Deposit Insurance Corporation (“CDIC”) up to C$100. At June 30, 2023 and 2022, the Company had $1,717 and $4,721 in excess of the FDIC and CDIC insured limits, respectively. c) Foreign Currency Translation Functional and reporting currency Items included in the financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The reporting currency for these consolidated financial statements is U.S. dollars. Change in functional currency Prior to March 17, 2023, the Company’s functional currency was the Canadian dollar. The Company re-assessed its functional currency and determined that on March 17, 2023, its functional currency changed from the Canadian dollar to the U.S. dollar based on significant changes in economic facts and circumstances in our organization. The change in functional currency was accounted for prospectively from March 17, 2023 and prior-period consolidated financial statements were not restated for the change in functional currency. 69 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) For both monetary and non-monetary assets and liabilities, translated balances as of March 17, 2023 became the new accounting basis. The exchange rate on the date of change became the historical rate at which non-monetary assets and liabilities were translated in subsequent periods. There was no effect on the cumulative translation adjustment on the consolidated basis. Previously recorded cumulative translation adjustments were not reversed. The functional currency for the Company’s Canadian subsidiary, 0896800 BC Ltd., which has no independent operations from its parent, also changed from the Canadian dollar to the U.S. dollar. The functional currency for Elk Creek Resources Corp. remains as the U.S. dollar. Transactions in foreign currency Transactions made in a currency other than the functional currency are remeasured to the functional currency at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are remeasured to the functional currency at the exchange rate at that date and non-monetary assets and liabilities are remeasured at historical rates. Foreign currency translation gains and losses are included in profit or loss. Translation to reporting currency Translation gains and losses from the application of the U.S. dollar as the reporting currency for all periods prior to March 17, 2023 (when the Canadian dollar was the functional currency) are included as part of cumulative currency translation adjustment, which is reported as a component of shareholders’ equity under accumulated other comprehensive loss. d) Mineral Properties Mineral property acquisition costs, including indirectly related acquisition costs, are capitalized when incurred. Acquisition costs include cash consideration and the fair market value of Common Shares issued as consideration. Properties acquired under option agreements, whereby payments are made at the sole discretion of the Company, are capitalized as mineral property acquisition costs at such time as the payments are made. Exploration costs are expensed as incurred. When it is determined that a mining deposit can be economically and legally extracted or produced based on established proven and probable reserves under S-K 1300, and the Board of Directors has approved the commencement of formal development activities, development costs related to such reserves and incurred after such board approval will be considered for capitalization. The establishment of proven and probable reserves is based on results of feasibility studies, which indicate whether a property is economically feasible. Upon commencement of commercial production, capitalized costs will be amortized over their estimated useful lives or units of production, whichever is a more reliable measure. Capitalized amounts relating to a property that is abandoned or otherwise considered uneconomic for the foreseeable future are written off. The recoverability of the carrying values of mineral properties is dependent upon economic reserves being discovered or developed on the properties, permitting, financing, start-up, and commercial production from, or the sale/lease of, or other strategic transactions related to these properties. Development and/or start-up of a project will depend on, among other things, management’s ability to raise sufficient capital for these purposes. We assess the carrying cost of our mineral properties for impairment whenever information or circumstances indicate the potential for impairment. This would include events and circumstances such as our inability to obtain all the necessary permits, changes in the legal status of our mineral properties, government actions, the results of exploration activities and technical evaluations and changes in economic conditions, including the price of commodities or input prices. Such evaluations compare estimated future net cash flows with our carrying costs and future obligations on an undiscounted basis. If it is determined that the estimated future undiscounted cash flows are less than the carrying value of the property, an impairment loss will be recorded. Where estimates of future net cash flows are not determinable and where other conditions indicate the potential for impairment, management uses available market information and/or third-party valuation experts to assess if the carrying value can be recovered and to estimate fair value. There was no impairment recorded to mineral properties as of June 30, 2023 or 2022, respectively. e) Long Lived Assets Long-lived assets, other than mineral properties, held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. 70 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) For purposes of evaluating the recoverability of long-lived assets, the recoverability test is performed using undiscounted net cash flows related to the long-lived assets. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. There was no impairment recorded to long-lived assets as of June 30, 2023 or 2022, respectively. f) Leases Under Accounting Standards Codification (“ASC”) 842, “Leases,” we determine if a contractual arrangement is, or contains, a lease at the inception date. Right-of-use (“ROU”) assets and liabilities related to operating leases are separately reported in the consolidated balance sheets. The Company currently has no finance leases. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the lease term. When the rate implicit to the lease cannot be readily determined, we utilize our incremental borrowing rate in determining the present value of the future lease payments. The incremental borrowing rate is derived from information available at the lease commencement date and represents the rate of interest that a lessee would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic environment. Operating lease ROU assets also include any cumulative prepaid or accrued rent when the lease payments are uneven throughout the lease term. The ROU assets and lease liabilities may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease liabilities are increased by interest and reduced by payments each period, and the ROU asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the ROU asset result in straight-line rent expense over the lease term. Variable lease expenses are recorded when incurred. g) Warrants We apply relevant accounting guidance for warrants to purchase our stock based on the nature of the relationship with the counterparty. For warrants issued to investors or lenders in exchange for cash or other financial assets, we follow guidance issued within ASC 480, Distinguishing Liabilities from Equity, and ASC Topic 815, Derivatives and Hedging, (“ASC 815”) to assist in the determination of whether the warrants should be classified as liabilities or equity. The fair value of warrants is estimated using Black Scholes modeling or Monte Carlo modeling, depending on the settlement features embedded in the warrant. Inputs under both models include inputs such as NioCorp’s Common Share price, the risk-free interest rate, the expected term, the volatility, and the dividend rate. Warrants that are determined to require liability classifications are measured at fair value upon issuance and are subsequently remeasured to their then fair value at each subsequent reporting period with changes in fair value recorded in current earnings. Warrants that are determined to require equity classifications measured at fair value upon issuance and are not subsequently remeasured unless they are required to be reclassified. h) Earnout Shares Earnout Shares are classified as a liability due to failure to meet the equity classification criteria under ASC 815-40. The fair value of the Earnout Shares on the date of issuance and on each measurement date is estimated using a Monte Carlo simulation methodology, which includes inputs such as NioCorp’s Common Share price, the risk-free interest rate, the expected term, the implied volatility underlying the Company’s Public Warrants, the dividend rate, the conversion price, and the number of Earnout Shares outstanding. Assumptions used in the model are subjective and require significant judgment. i) Financial Instruments The Company’s financial instruments consist of cash and cash equivalents, receivables, equity securities, accounts payable and accrued liabilities, convertible debt and the related party loan. It is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from its financial instruments. The fair values of these instruments approximate their carrying value unless otherwise noted. j) Concentration of Credit Risk The financial instrument which potentially subjects the Company to credit risk is cash and cash equivalents, The Company holds investments or maintains available cash primarily in two commercial banks located in Vancouver, 71 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) British Columbia and Santa Clara, California. As part of its cash management process, the Company regularly monitors the relative credit standing of these institutions. k) Asset Retirement Obligation The Company is subject to various government laws and regulations relating to environmental disturbances caused by exploration and evaluation activities. The estimated costs associated with environmental remediation obligations are accrued in the period in which the liability is incurred if it is reasonably estimable or known. Until such time that a project life is established, the Company records the corresponding cost as an exploration stage expense and has accrued $ 48 as an accrued liability related to estimated obligations as of June 30, 2023 (2022 - $ 48 ). Future reclamation and environmental-related expenditures are difficult to estimate in many circumstances due to the early-stage nature of the Elk Creek Project, the uncertainties associated with defining the nature and extent of environmental disturbance, the application of laws and regulations by regulatory authorities and changes in reclamation or remediation technology. The Company periodically reviews accrued liabilities for such reclamation and remediation costs as evidence indicating that the liabilities have potentially changed becomes available. Changes in estimates are reflected in the consolidated statement of operations and comprehensive loss in the period an estimate is revised. l) Income Taxes Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10-25, “Income Taxes – Recognition.” Under the approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard imposed by ASC 740-10-25-5 to allow recognition of such an asset. ASC 740-10-50, “Income Taxes – Disclosure,” requires the Company to evaluate its income tax positions and recognize a liability for uncertain tax positions that are not more likely than not to be sustained by tax authorities. As of June 30, 2023 and 2022, the Company believes it had no income tax uncertainties that required recognition of a liability. If the Company were to determine that uncertain tax positions meet the criteria for recognition, an estimated liability and related interest and penalties would be recognized as income tax expense. m) Reverse Stock Split On March 17, 2023, the Company effected a reverse stock split (the “Reverse Stock Split”) on the basis of one (1) post-Reverse Stock Split Common Share for every ten (10) pre-Reverse Stock Split Common Shares issued and outstanding, with any fractional shares resulting from the Reverse Stock Split rounded down to the nearest whole share. Immediately after the Reverse Stock Split, there were 30,000,442 Common Shares issued and outstanding. All references to share and per share amounts (excluding authorized shares) in the consolidated financial statements and accompanying notes have been retroactively restated to reflect the Reverse Stock Split. n) Redeemable Noncontrolling Interest Redeemable Noncontrolling Interest refers to non-controlling interest associated with the Vested Shares that are redeemable upon the occurrence of an event that is not solely within the Company’s control and is reported in the mezzanine section between total liabilities and shareholders’ deficit, as temporary equity in the Company’s consolidated balance sheets. The Company’s non-controlling interest is redeemable at fair value, and no adjustment to the earnings per share numerator is required because redemption at fair value is not considered an economic distribution different from other common stockholders. o) Basic and Diluted Per Share Disclosure Basic earnings (loss) per share represents net earnings (loss) attributable to common shareholders divided by the weighted average number of Common Shares outstanding during the period. The Company considers Vested Shares and Released Earnout Shares (each as defined in Note 10), to be participating securities, requiring the use of the two-class method. Diluted earnings (loss) per share represents net earnings (loss) attributable to common shareholders divided by the weighted average number of Common Shares outstanding, inclusive of the dilutive impact of all potentially dilutive securities outstanding during the period, as applicable. 72 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) The Company utilizes the weighted average method to determine the impact of changes in a participating security on the calculation of loss per share. The following table sets forth the computation of the Company’s basic and diluted net loss per share attributable to common shareholders: For the year ended June 30, 2023 2022 2021 Net loss $ 40,308 $ 10,887 $ 4,824 Adjust: Net loss attributable to noncontrolling interest (251 ) - - Net loss available to participating securities 40,057 10,887 4,824 Net loss attributable to Vested Shares ( 1,528 ) - - Net loss attributed to common shareholders - basic and diluted $ 38,529 $ 10,887 $ 4,824 Denominator: Weighted average shares outstanding – basic and diluted 28,705,840 26,373,722 24,196,711 Loss per Common Share outstanding – basic and diluted $ 1.34 $ 0.41 $ 0.20 The following shares underlying options, warrants, and outstanding convertible debt were antidilutive due to a net loss in the periods presented and, therefore, were excluded from the dilutive securities computation for the years ended June 30, 2023 and 2022, as indicated below. Schedule of excluded from the dilutive securities For the year ended June 30, 2023 2022 2021 Excluded potentially dilutive securities (1)(2) : Options 1,541,500 1,446,400 1,596,500 Warrants 18,816,304 1,851,622 1,434,186 Convertible debt 2,871,660 415,200 1,455,700 Total potentially dilutive securities 23,229,464 3,713,222 4,486,386 (1) The number of shares is based on the maximum number of shares issuable on exercise or conversion of the related securities as of the period end. Such amounts have not been adjusted for the treasury stock method or weighted average outstanding calculations as required if the securities were dilutive. (2) Earnout Shares (as defined below) are excluded as the vesting terms were not met as of the end of the reporting period. p) Share Based Compensation The Company grants stock options to directors, officers, employees, and business advisors. Option terms and vesting conditions are at the discretion of the Board of Directors. Prior to March 21, 2023, the option exercise price was equal to the closing market price on The Toronto Stock Exchange (the “TSX”) on the day preceding the date of grant. Effective March 21, 2023, the option exercise price is equal to the closing market price on the Nasdaq Stock Market LLC (“Nasdaq”) on the day preceding the date of the grant. The Company estimates the fair value of stock options using the Black-Scholes option pricing model. The Company recognizes forfeitures as they occur. q) Recent Accounting Standards Issued and Adopted In August 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), which simplifies the accounting for convertible instruments. ASU 2020-06 removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments. Either a modified retrospective method of transition or a fully retrospective method of transition is permissible for the adoption of this standard. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal 73 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) years. The Company adopted ASU 2020-06 on July 1, 2022, with no material effect on the Company’s current financial position, results of operations or financial statement disclosures. Issued and Not Effective From time to time, new accounting pronouncements are issued by the FASB that are adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards did not or will not have a material impact on the Company’s consolidated financial statements upon adoption. r) Revision of Financial Statements (Unaudited) During the fourth quarter of fiscal year 2023, the Company determined that it had used an incorrect strike price while valuing the Private Warrants (as defined below in Note 11c) at both the March 17, 2023, issuance date and as of March 31, 2023. This resulted in an overstatement of other operating expenses, at fair value, and an understatement of change in fair value of warrant liabilities in condensed consolidated statement of operations and comprehensive loss for both the three- and nine-month periods ended March 31, 2023. In addition, warrant liabilities, at fair value and accumulated deficit were overstated and understated, respectively, as of March 31, 2023. The Company determined that these errors were immaterial to the previously issued consolidated financial statements, and as such no restatement was necessary. Periods not presented herein will be revised, as applicable, in future filings. The effects of the revision on the previously issued consolidated financial statements are as follows: Revision Impacts to the Condensed Consolidated Balance Sheet (unaudited) As of March 31, 2023 Revision Impacts to the Condensed Consolidated Balance Sheet (unaudited) As of March 31, 2023 As Previously Reported Revision Impacts Revised Warrant liabilities, at fair value $ 5,303 $ ( 665 ) $ 4,638 Total liabilities 34,735 ( 665 ) 34,070 Accumulated deficit ( 146,046 ) 665 ( 145,381 ) Total shareholders’ deficit ( 12,512 ) 665 ( 11,847 ) Revision Impacts to the Condensed Consolidated Statement of Operations and Comprehensive Loss (unaudited) For the Three Months Ended March 31, 2023 Revision Impacts to the Condensed Consolidated Statement of Operations and Comprehensive Loss (unaudited) For the Three & Nine Months Ended March 31, 2023 As Previously Reported Revision Impacts Revised Other operating expense $ 26,220 $ ( 861 ) $ 25,359 Total operating expenses 29,192 ( 861 ) 28,331 Change in fair value of warrant liability 784 196 980 Loss before income taxes 29,621 ( 665 ) 28,956 Net loss 29,435 ( 665 ) 28,770 Net loss attributable to the Company 29,343 ( 665 ) 28,678 Total comprehensive loss 29,323 ( 665 ) 28,658 Comprehensive loss attributable to the Company 29,231 ( 665 ) 28,566 Loss per common share, basic and diluted $ 1.00 $ ( 0.02 ) $ 0.98 74 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) Revision Impacts to the Condensed Consolidated Statement of Operations and Comprehensive Loss (unaudited) For the Nine Months Ended March 31, 2023 As Previously Reported Revision Impacts Revised Other operating expense $ 26,888 $ ( 861 ) $ 26,027 Total operating expenses 33,475 ( 861 ) 32,614 Change in fair value of warrant liability 868 196 1,064 Loss before income taxes 35,927 ( 665 ) 35,262 Net loss 35,741 (665 ) 35,076 Net loss attributable to the Company 35,649 ( 665 ) 34,984 Total comprehensive loss 35,659 ( 665 ) 34,994 Comprehensive loss attributable to the Company 35,567 ( 665 ) 34,902 Loss per common share, basic and diluted $ 1.26 $ ( 0.02 ) $ 1.24 Revision Impacts to the Condensed Consolidated Statement of Cash Flows (unaudited) For the Nine Months Ended March 31, 2023 Revision Impacts to the Condensed Consolidated Statement of Cash Flows (unaudited) For the Nine Months Ended March 31, 2023 As Previously Reported Revision Impacts Revised CASH FLOWS FROM OPERATING ACTIVITIES Net loss for the period $ ( 35,741 ) $ 665 $ ( 35,076 ) Initial valuation of warrants 3,848 ( 861 ) 2,987 Change in fair value of warrants 868 196 1,064 4. GOING CONCERN ISSUES The Company incurred a net loss of $ 40,080 for the year ended June 30, 2023 (2022 - $ 10,887 and 2021 - $ 4,824 ) and had an accumulated deficit of $150,477 as of June 30, 2023. As a development stage issuer, the Company has not yet commenced its mining operations and accordingly does not generate any revenue. As of June 30, 2023, the Company had cash and cash equivalents of $ 2,341 which is not sufficient to fund normal operations for the next twelve months without deferring payment on certain liabilities or raising additional funds. In addition, the Company will be required to raise additional funds for construction and commencement of operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company’s ability to continue operations and fund its expenditures, which have historically averaged approximately $ 2,350 per quarter over the preceding three-year period, is dependent on management’s ability to secure additional financing. NioCorp expects to have access to up to $62,577 in net proceeds from the Yorkville Equity Facility Financing through April 1, 2026, as discussed in Note 11d. Management is actively pursuing additional sources of financing, and while it has been successful in doing so in the past, there can be no assurance it will be able to do so in the future. Other than the potential issuance of Common Shares under the Yorkville Equity Facility Financing Agreement, the Company did not have any further funding commitments or arrangements for additional financing as of June 30, 2023. These consolidated financial statements do not give effect to any adjustments required to realize the Company’s assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying consolidated financial statements. Recent worldwide events have created general global economic uncertainty as well as uncertainty in capital markets, supply chain disruptions, increased interest rates and inflation, and the potential for geographic recessions. We believe this could have an adverse impact on our ability to obtain financing, development plans, results of operations, financial position, and cash flows during the current fiscal year. The full extent to which these events and our precautionary measures may continue to impact our business will depend on future developments, which continue to be highly uncertain and cannot be predicted at this time. 5. GXII TRANSACTION Pursuant to the Business Combination Agreement, the following transactions (collectively, the “GXII Transaction”) occurred on the Closing Date: ● As a result of a series of transactions, GXII became an indirect, majority-owned subsidiary of NioCorp and changed its name to “Elk Creek Resources Corp” (“ECRC”). ● As the parent company of the merged entity, NioCorp issued 1,753,821 post-Reverse Stock Split 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, NioCorp 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 75 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) 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. See Note 10 for additional information regarding the Class B common stock of ECRC. ● NioCorp assumed GXII’s obligations under the agreement (the “GXII Warrant 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. See Note 11c for additional information regarding the NioCorp Assumed Warrants. After the distribution of funds to GXII redeeming shareholders and prior to paying transaction costs incurred by GXII, $15,676 became available to the Company. The following table summarizes the elements of the GXII Transaction allocated to the Consolidated Statements of Operations and Comprehensive Loss: Amount Gross cash proceeds, net of transaction costs incurred by GXII $ 2,168 Less: Cash costs associated with the Transactions: Net liabilities assumed 392 Yorkville Equity Facility Financing Agreement – cash costs 1,996 Transaction costs expensed 6,715 Non-cash costs associated with the Transactions: Private Warrants assumed at fair value 2,987 Earnout Shares assumed at fair value 13,195 Yorkville Equity Facility Financing Agreement – shares issued 650 Total transaction related losses incurred $ 23,767 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 in Note 11d) issued under the Yorkville Equity Facility Financing Agreement. In connection with the GXII Transaction, the Company also closed the Yorkville Convertible Debt Financing and the Yorkville Equity Facility Financing, as discussed in Notes 9 and 11d. 6. LAND AND BUILDINGS, NET Schedule of properties As of June 30, 2023 2022 Cost Accumulated Depreciation Net Cost Accumulated Depreciation Net Land $ 807 $ - $ 807 $ 811 $ - $ 811 Buildings and other 41 9 32 45 6 39 $ 848 $ 9 $ 839 $ 856 $ 6 $ 850 76 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) In October 2022, the Company entered into an agreement with the State of Nebraska (the “State”) to sell a strip of Company-owned land totaling approximately 1.27 acres located adjacent to State Highway 50 in connection with highway improvements to be completed by the State, for $ 21 , inclusive of estimated fence replacement costs. The Company retained ownership of the mineral rights associated with this 1.27-acre parcel. The Company recorded a gain on this sale of $ 13 in other gains in the consolidated statement of operations and comprehensive loss. 7. MINERAL PROPERTIES During the year ended June 30, 2011, the Company completed the acquisition of the Elk Creek property through a share exchange agreement with 0859404 BC Ltd, a Canadian company, which owned all the issued and outstanding shares of ECRC. The Company issued 1,899,053 Common Shares to acquire all of the issued and outstanding shares of 0859404 BC Ltd. and issued 103,434 Common Shares as a finder’s fee with respect to the acquisition. The transaction did not meet the definition of a business acquisition, as set forth in ASC 805, “Business Combinations,” and therefore was accounted for as a purchase of assets. The acquisition price was based on the market value of the Company’s Common Shares on the closing date and total consideration given was C$ 13,246 , including associated deferred tax impacts of C$ 4,736 . On April 23, 2021, ECRC formally closed the purchase of two parcels of land and associated buildings and mineral rights in Johnson County, Nebraska, associated with the Elk Creek Project, pursuant to an Amended and Restated Option to Purchase, dated as of April 29, 2020 (the “Option Agreement”). Pursuant to the terms of the Option Agreement, the Owner sold, transferred, conveyed and assigned all of the rights, privileges, title and interest in and to the real property to ECRC, including any associated mineral rights. The Option Agreement provided for a purchase price calculated based on the appraised value per acre of the parcels of land, the mineral rights and the structures erected on the land. The purchase price was approximately $ 6,300 , including indirect costs of $ 57 . Of this amount, $ 837 was allocated to land and buildings and the remaining $ 5,468 was allocated to mineral properties as costs related to mineral rights acquisition. In addition to the land and mineral rights currently owned by the Company, the property interests of Elk Creek include eight prepaid mineral exploration option-to-purchase agreements and include a pre-determined buyout for permanent ownership of the mineral and/or surface rights. Terms of the agreements require no further significant payments, and the Company may negotiate lease extensions or elect to purchase the mineral and/or surface rights any time. Agreements that allow for the purchase of mineral rights contain provisions whereby the landowners would retain a 2% net smelter return. 8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Schedule of account payable and accrued liabilities As of June 30, 2023 2022 Accounts payable, trade $ 1,990 $ 115 Trade payable accruals 1,324 654 Income taxes payable 101 - Environmental accruals 48 48 Loan origination fees payable to related party 28 - Total accounts payable and accrued liabilities $ 3,491 $ 817 9. CONVERTIBLE DEBT Schedule of convertible debt As of June 30, 2023 2022 Current Portion: Lind III convertible security $ - $ 2,169 Noncurrent Portion: Yorkville convertible debentures $ 10,561 $ - 77 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) Lind III Convertible Security On February 16, 2021, the Company issued to Lind Global Asset Management III, LLC (“Lind”), an entity managed by The Lind Partners, the convertible security (the “Lind III Convertible Security”) pursuant to the Convertible Security Funding Agreement, dated February 16, 2021, as amended by Amendment #1 to the Convertible Security Funding Agreement, dated December 2, 2021, between the Company and Lind (as amended, the “Lind III Agreement”). The Lind III Convertible Security had a face value of $ 11,700 (representing $10,000 in funding plus an implied 8.5 % interest rate per annum for the term of the Lind III Convertible Security). After deducting a $ 350 commitment fee as set forth in the Lind III Agreement, NioCorp received net proceeds of $ 9,650 from the funding of the Lind III Convertible Security. The Company used a portion of the proceeds from the funding of the Lind III Convertible Security to purchase a key land parcel associated with the Company’s Elk Creek Project, with the remainder spent for general corporate purposes. The Lind III Convertible Security had a term of (i) 24 months or (ii) 30 calendar days after the date on which the face value of the Lind III Convertible Security is nil due to such amount having been fully converted and/or fully repaid (including with any applicable premium) in accordance with the terms of the Lind III Agreement, whichever is earlier. Pursuant to the Lind III Agreement, Lind was entitled to convert the Lind III Convertible Security into Common Shares in monthly installments over its term at a price per Common Share equal to 85% of the volume-weighted average price Common Shares on the TSX for the five trading days immediately preceding to the date on which Lind provides notice to the Company of its election to convert. The Lind III Agreement provided that Common Shares issuable upon conversion, together with the number of Common Shares issued upon exercise of Warrants, shall not exceed 4,358,800 Common Shares. On February 19, 2021, in connection with the funding and issuance of the Lind III Convertible Security, the Company issued 855,800 Common Share purchase warrants, exercisable at a price per Common Share of C$ 9.70 , expiring February 19, 2025 (the “Lind III Warrants”), to Lind pursuant to the Lind III Agreement. The Company identified embedded derivatives in the Lind III Convertible Security that were evaluated to be immaterial at both the closing date and at June 30, 2022. The Company allocated the net proceeds of $ 9,477 from the Lind III Convertible Security as follows: ● $1,712 was allocated to Common Stock, representing the fair value of the Lind III Warrants based on the Black Scholes pricing model using a risk-free interest rate of 0.40 %, an expected dividend yield of 0 %, a volatility of 51.60 %, and an expected life of 4.0 years. ● $ 7,938 was allocated to the convertible debt liability. Transaction costs of $ 173 , in addition to a commitment fee of $ 350 , were recognized as a direct deduction from the debt liability, resulting in a net opening balance of $7,765. This balance was accreted up to the face value of the Lind III Convertible Security at maturity using the effective interest method and recorded as non-cash interest expense in the consolidated statement of operations and comprehensive loss. Changes in the Lind III Convertible Security are as follows: For the year ending June 30, 2023 2022 Beginning balance $ 2,169 $ 7,234 Fair value increase due to debt extinguishment 201 - Conversions ( 1,950 ) ( 7,635 ) Accretion expense 95 2,570 Payment at maturity ( 515 ) - Balance, end of period $ - $ 2,169 78 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) On September 25, 2022, the Company and Lind entered into the Waiver and Consent Agreement, dated September 25, 2022, between the Company and Lind (the “Lind Consent”), which included the following principal terms: (i) the consent of Lind to the GXII Transaction disclosed in Note 5 and Yorkville Financings disclosed below and in Note 11d, including all actions taken by NioCorp as set out in the Business Combination Agreement to permit the completion of the Transactions; (ii) the consent of Lind to NioCorp’s expected cross-listing to the Nasdaq and the consolidation of the Common Shares in order to meet the minimum listing requirements thereof; (iii) the waiver of Lind of its participation right for up to 15% of the total offering in the Yorkville Equity Facility Financing; and (iv) the waiver of Lind of certain restrictive covenants in the Lind III Agreement. As consideration for entering into the Lind Consent, Lind received, amongst other things: (i) the right to receive a payment of $500, which would have been reduced to $200 if the Transactions had not been consummated on or before April 30, 2023 (collectively, the “Consent Payment”); (ii) an extension of its existing participation rights under the Lind III Agreement in future financings of NioCorp for a further two-year period, subject to certain exceptions as well as an extension of such participation rights beyond the additional two-year period if Yorkville or any affiliate is a party to any such applicable transaction; and (iii) the right to receive additional Warrants (the “Contingent Consent Warrants”) if on the date that is 18 months following the Closing Date, the closing trading price of the Common Shares on the TSX or such other stock exchange on which such shares may then be listed, is less than C$10.00 (on a post-Reverse Stock Split basis), subject to adjustments. The number of Contingent Consent Warrants to be issued, if any, is based on the Canadian dollar equivalent (based on the then current Canadian to US dollar exchange rate as reported by Bloomberg, LP) of $5,000 divided by the five-day volume weighted average price of the Common Shares on the date of issuance. Further, the number of Contingent Consent Warrants issued will be proportionately adjusted based on the percentage of Warrants currently held by Lind that are exercised, if any, prior to the issuance of any Contingent Consent Warrants. The Lind Consent was signed as an amendment to the existing Lind III Agreement. Management determined that the Lind Consent should be evaluated using ASC 470, which requires an evaluation of the contract amendment under debt modification guidance. The Company performed a comparison of the discounted cash flows of the Lind III Convertible Security pursuant to the existing Lind III Agreement and pursuant to the Lind III Agreement as amended by the Lind Consent and determined that a debt extinguishment loss of $201 had occurred. Further, ASC 470 requires that the minimum estimated Consent Payment of $200 also be included in the calculation of the initial loss on debt extinguishment. The Company also evaluated the Contingent Consent Warrant feature included in the Lind Consent and determined that the Contingent Consent Warrants meet the criteria to be considered separate, freestanding instruments, should be accounted for as a liability under ASC 480, and should be booked at fair value on the date of the Lind Consent, with subsequent changes in valuation recorded as a non-operating gain or loss in the consolidated statement of operations and comprehensive loss. The following table summarizes the components of the initial loss and final loss on extinguishment: The following table summarizes the components of the initial loss on extinguishment: Component of loss Amount Minimum Consent Payment at inception $ 200 Loss on debt extinguishment 201 Initial fair value of Contingent Consent Warrants 1,221 Initial loss on debt extinguishment 1,622 Additional Consent Payment booked 1 300 Total loss on debt extinguishment $ 1,922 1 Represents the difference between the accrual of the minimum Consent Payment at September 25, 2022 and the actual payment made on March 17, 2023. The change in the fair value of the Contingent Consent Warrants is presented below: Amount Initial valuation, September 25, 2022 $ 1,221 Change in valuation 489 Valuation at June 30, 2023 $ 1,710 79 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) The Contingent Consent Warrants are classified as a Level 3 financial instrument and were valued utilizing a Monte Carlo simulation pricing model, which calculates multiple potential outcomes for future share prices based on historic volatility of the Common Shares to determine the probability of issuance at 18 months following the applicable valuation date and to determine the value of the Contingent Consent Warrants. The following table discloses the primary inputs into the Monte Carlo model at each valuation date, and the probability of issuance calculated by the model. Schedule of valuation date and the probability calculated. Key Valuation Input September 25, 2022 June 30, 2023 Share price on valuation date $ 7.82 $ 5.03 Volatility 62.4 % 63.0 % Risk free rate 3.93 % 4.11 % Probability of issuance 59.4 % 80.8 % Loss on debt extinguishment is presented as a non-operating expense in the Company’s consolidated statements of operations and comprehensive loss. This accounting also resulted in a decrease in the amount of accretion to be recognized over the remaining life of the Lind III Convertible Security through February 2023. Accretion expenses are disclosed as a part of interest expense, which is not included as a component of operating costs. Yorkville Convertible Debentures In connection with the GXII Transaction, on January 26, 2023, NioCorp entered into definitive agreements with respect to the Yorkville Financings, including a Securities Purchase Agreement, dated January 26, 2023 (as amended the “Yorkville Convertible Debt Financing Agreement”), between the Company and Yorkville, and a Standby Equity Purchase Agreement, dated January 26, 2023 (the “Yorkville Equity Facility Financing Agreement”), between the Company and Yorkville. Pursuant to the Yorkville Convertible Debt Financing Agreement, at the Closing, Yorkville advanced a total amount of $15,360 to NioCorp in consideration of the issuance by NioCorp to Yorkville of (i) $ 16,000 aggregate principal amount of unsecured convertible debentures (the “Convertible Debentures”) and (ii) 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”). Each Convertible Debenture issued under the Yorkville Convertible Debt Financing Agreement is an unsecured obligation of NioCorp, has an 18-month term from the Closing Date, which may be extended for one six-month period in certain circumstances at the option of NioCorp, and incurs a simple interest rate obligation of 5.0 % per annum (which will increase to 15.0 % per annum upon the occurrence of an event of default). The outstanding principal amount of, accrued and unpaid interest, if any, on, and premium, if any, on the Convertible Debentures must be paid by NioCorp in cash when the same becomes due and payable under the terms of the Convertible Debentures at their stated maturity, upon their redemption or otherwise. Subject to certain limitations contained within the Yorkville Convertible Debt Financing Agreement and the Convertible Debentures, including those as described below, holders of the Convertible Debentures will be entitled to convert the principal amount of, and accrued and unpaid interest, if any, on each Convertible Debenture, in whole or in part, from time to time over their term, into a number of Common Shares equal to the quotient of the principal amount and accrued and unpaid interest, if any, being converted divided by the Conversion Price. The “Conversion Price” means, as of any Conversion Date (as defined below) or other date of determination, the greater of (i) 90% of the average of the daily U.S. dollar volume-weighted average price of the Common Shares on the principal U.S. market for the Common Shares as reported by Bloomberg Financial Markets during the five consecutive trading days immediately preceding the date on which the holder exercises its conversion right in accordance with the requirements of the Yorkville Convertible Debt Financing Agreement (the “Conversion Date”) or other date of determination, but not lower than the Floor Price (as defined below), and (ii) the five-day volume-weighted average price of the Common 80 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) Shares on the TSX (or on the principal U.S. market if the majority of the trading volume and value of the Common Shares occurred on Nasdaq during the relevant period) for the five consecutive trading days immediately prior to the Conversion Date or other date of determination less the maximum applicable discount allowed by TSX. The “Floor Price” means a price of $2.1435 per share, which is equal to the lesser of (a) 30% of the average of the daily volume-weighted average price of the Common Shares on the principal U.S. market for the Common Shares as reported by Bloomberg Financial Markets during the five consecutive trading days immediately preceding the Debenture Closing and (b) 30% of the average of the volume-weighted average price of the Common Shares on the principal U.S. market for the Common Shares as reported by Bloomberg Financial Markets during the five consecutive trading days immediately following the Debenture Closing, subject to certain adjustments to give effect to any stock dividend, stock split, reverse stock split, recapitalization or similar event. The terms of the Convertible Debentures restrict the number of Convertible Debentures that may be converted during each calendar month by Yorkville at a Conversion Price below a fixed price equal to approximately $8.9422 (i.e., the quotient of $10.00 divided by 1.11829212 (being the number of Common Shares that were exchanged for each share of GXII at the Closing, after giving effect to the Reverse Stock Split)), subject to adjustment to give effect to any stock dividend, stock split, reverse stock split, recapitalization or similar event. The Convertible Debentures are subject to customary anti-dilution adjustments. The terms of the Convertible Debentures restrict the conversion of Convertible Debentures by Yorkville if such a conversion would cause Yorkville to exceed certain beneficial ownership thresholds in NioCorp or such a conversion would cause the aggregate number of Common Shares issued pursuant to the Yorkville Convertible Debt Financing Agreement to exceed the thresholds for issuance of Common Shares under the rules of the TSX and Nasdaq, unless prior shareholder approval is obtained. Pursuant to the terms of the Convertible Debentures, following certain trigger events, and until a subsequent cure event, NioCorp will be required to redeem $1,125 aggregate principal amount of Convertible Debentures (the “Triggered Principal Amount”) each month by making cash payments to the Investors, on a pro rata basis, in an amount equal to the Triggered Principal Amount, plus accrued and unpaid interest thereon, if any, plus a redemption premium of 7% of the Triggered Principal Amount. Such monthly prepayments under the terms of the Convertible Debentures are triggered (i) at the time when NioCorp has issued 95% of the total amount of Common Shares pursuant to the Yorkville Convertible Debt Financing that it may issue under applicable TSX and Nasdaq rules or (ii) when NioCorp has delayed or suspended the effectiveness or use of the Convertible Debt Financing Registration Statement for more than 20 consecutive calendar days, and such monthly prepayment obligations will continue until, with respect to (i) above, shareholder approval is obtained or, with respect to (ii) above, the Investors may once again resell Common Shares under the Convertible Debt Financing Registration Statement, respectively. The Convertible Debentures may also be redeemed at NioCorp’s option at any time and from time to time over their term at a redemption price equal to 110 % of the principal amount being redeemed, plus accrued and unpaid interest, if any. In conjunction with the issuance of the Convertible Debentures, NioCorp issued to Yorkville 1,789,267 Financing Warrants at an exercise price of approximately $ 8.9422 per Common Share (the “Financing Warrant Exercise Price”), subject to adjustment to give effect to any stock dividend, stock split, reverse stock split recapitalization or similar event. The Financing Warrants are exercisable, in whole or in part, but not in increments of less than $ 50 aggregate Financing Warrant Exercise Price (unless the remaining aggregate Financing Warrant Exercise Price is less than $50), beginning on May 4, 2023, and may be exercised at any time prior to their expiration. Holders of the Financing Warrants may exercise their Financing Warrants, at their election, by paying the Financing Warrant Exercise Price in 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 exercise basis. 1/12th of the Financing Warrants will expire on each of the first 12 monthly anniversaries of the date that is six months following the Closing Date. The Financing Warrants have customary anti-dilution adjustments to be determined in accordance with the requirements of the applicable stock exchanges, including the TSX. The terms of the Financing Warrants restrict the 81 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) exercise of Financing Warrants by Yorkville if such an exercise would cause Yorkville to exceed certain beneficial ownership thresholds in NioCorp or such an exercise would cause the aggregate number of Common Shares issued pursuant to the Yorkville Convertible Debt Financing Agreement to exceed the thresholds for issuance of Common Shares under the rules of the Nasdaq and the TSX, unless prior shareholder approval is obtained. The Financing Warrants were originally recorded as a $ 2,704 contingent liability on January 26, 2023, and were subsequently marked to market of $ 3,337 through March 16, 2023. The change in fair value during this period resulted in a loss of $ 633 , which was booked to change in fair value of warrant liability in the consolidated statement of operations and comprehensive loss. The Financing Warrants were reclassified to shareholders equity on March 17, 2023, in connection with the closing of the Convertible Debentures as noted below. The Company allocated the net proceeds of $15,360 from the Convertible Debentures as follows: ● $ 2,704 was booked to Common Shares, representing the initial fair value of the Financing Warrant tranches on January 26, 2023 based on the Black Scholes pricing model using a risk-free interest rate of 4.33 %, an expected dividend yield of 0 %, a volatility of 64.6 %, and an expected life of 6 months to 18 months . ● $ 12,656 was booked to the convertible debt liability. In addition, transaction costs of $ 503 were recognized as a direct deduction from the debt liability, resulting in a net opening balance of $12,153 at an effective interest rate of 18.4%. This balance will be accreted to face value of the Convertible Debentures at maturity using the effective interest method and recorded as non-cash interest expense in the consolidated statement of operations and comprehensive loss. Changes in the Convertible Debentures are as follows: Amount Opening balance, March 17, 2023 $ 12,153 Accretion expense 1,962 Principal and accrued interest converted ( 3,554 ) Balance, June 30, 2023 $ 10,561 Add: Unamortized debt issuance costs 2,439 Remaining principal balance, June 30, 2023 $ 13,000 Upon conversion, the portion of remaining unamortized issuance costs associated with the conversion are recognized as a component of interest expense. The Convertible Debentures contain events of default customary for instruments of their type (with customary grace periods, as applicable) and provide that, upon the occurrence of an event of default arising from certain events of bankruptcy or insolvency with respect to NioCorp, all outstanding Convertible Debentures will become due and payable immediately without further action or notice. If any other type of event of default occurs and is continuing, then any holder may declare all of its Convertible Debentures to be due and payable immediately. The Company obtained a waiver from Yorkville with respect to any acceleration rights it may have under the Convertible Debentures in connection with the restatements of the Company’s consolidated financial statements for the periods ended September 30, 2022 and December 31, 2022 and the delay in filing the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023. The Yorkville Convertible Debt Financing Agreement also contains certain covenants that, among other things, limit NioCorp’s ability to use the proceeds from the Yorkville Convertible Debt Financing to repay related party debt or to enter into any variable rate transaction other than with Yorkville, subject to certain exceptions. Based on the Company’s closing Common Share price of $ 5.03 as of June 30, 2023, conversion of the remaining Convertible Debenture principal balance of $13.0 million, including accrued interest, would require the issuance of approximately 2,871,660 Common Shares. For each $0.10 change in the fair value of one Common Share, the total shares the Company would be obligated to issue would change by approximately 58,300 shares. 82 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) 10. CLASS B COMMON STOCK OF ECRC Pursuant to the Business Combination Agreement, the Sponsor Support Agreement, and the Exchange Agreement, after the Closing, the GXII founders have the right to exchange shares of Class B common stock of ECRC for Common Shares on a one-for-one basis, subject to certain equitable adjustments, under certain conditions. All 7,957,404 shares of Class B common stock of ECRC that were issued in connection with the Closing were issued and outstanding as of June 30, 2023. 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. Under certain circumstances, and subject to certain exceptions, NioCorp may instead settle all or a portion of any exchange pursuant to the terms of the Exchange Agreement in cash, in lieu of Common Shares, based on a volume-weighted average price of Common Shares. All of the shares of Class B common stock of ECRC are subject to the Amended and Restated Registration Rights Agreement, dated as of March 17, 2023 (the “Registration Rights and Lock-up Agreement”), among NioCorp, GXII, the Sponsor, the pre-Closing directors and officers of NioCorp and the other parties thereto, including the members of the Sponsor. Pursuant to Registration Rights and Lock-up Agreement, all shares of Class B common Stock of ECRC (including the Vested Shares and the Released Earnout Shares) are subject to certain “lock-up” restrictions on transfer beginning upon the Closing and ending upon the earlier of (i) one year after the Closing and (ii) the date on which the trading price of Common Shares exceeds certain thresholds or the date on which NioCorp completes a transaction that results in all of NioCorp’s shareholders having the right to exchange their Common Shares for cash, securities or other property. Both Vested Shares and Released Earnout Shares may be exchanged by the holders into Common Shares at any time. Under the Exchange Agreement, all Vested Shares and Earnout Shares must be exchanged for Common Shares by the Ten-Year Anniversary except for Released Earnout Shares that have been vested for a period of fewer than twenty-four months as of the Ten-Year Anniversary. Such Released Earnout Shares will be forfeited if not exchanged for Common Shares by the date that is twenty-four months after the vesting date. Vested Shares As the exchange of Vested Shares are contingently redeemable at the option of the noncontrolling interest shareholders, the Company classifies the carrying amount of the redeemable noncontrolling interest in the mezzanine section on the consolidated balance sheet, which is presented above the equity section and below liabilities. The redeemable noncontrolling interests are classified as a Level 1 financial instrument and are measured at the fair value of the Company’s Common Shares at each reporting period. Adjustments to the carrying value of the redeemable noncontrolling interest are recorded through retained earnings. Earnout Shares The Earnout Shares vest (the “Released Earnout Shares”) in two equal tranches based upon achieving market share price milestones of approximately $12.00 per Common Share and approximately $15.00 per Common Share, respectively, prior to the Ten-Year Anniversary, or upon a change in control as defined in the underlying agreement. These shares will be forfeited if the market share price milestones or an acceleration event is not reached prior to the Ten-Year Anniversary. At such time that the Earnout Shares shall become vested, and therefore, become Released Earnout Shares, the shares will be transferred to the redeemable noncontrolling interest in the mezzanine section of the Consolidated Balance Sheet. The Earnout Shares were classified as a liability due to failure to meet the equity classification criteria under ASC 815-40, as Level 3 instruments under the fair value hierarchy and are considered a financial liability under ASC 480, Distinguishing Liabilities from Equity. The Earnout Shares were measured at fair value on the Closing Date with subsequent changes in fair value recorded in earnings. The Earnout Shares were valued utilizing a Monte Carlo simulation pricing model, which calculates multiple potential outcomes for future share prices and establishes current fair value based on the most likely outcome. The following table discloses the primary inputs into the Monte Carlo models. 83 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) The following table discloses the primary inputs into the Monte Carlo models. Key Valuation Input Transaction Close June 30, 2023 Closing Common Share price $ 7.00 $ 5.03 Term (expiry) March 17, 2033 March 17, 2033 Implied volatility of Public Warrants 19.5 % 33.5 % Risk-free rate 3.39 % 3.83 % The following table sets forth a summary of the changes in the fair value of the Earnout Shares liability for the year ended June 30, 2023: Amount Fair value as of March 17, 2023 $ 13,195 Change in fair value ( 2,674 ) Fair value as of June 30, 2023 $ 10,521 11. COMMON SHARES a) Issuances Fiscal Year 2023 Issuances In addition to the Common Shares issued in connection with the GXII Transaction, as discussed in Note 5, the following Common Share issuances occurred during fiscal year 2023: On April 28, 2023, the Company closed a registered direct offering and issued 314,465 Common Shares for $ 2.0 million , before deducting share issuance costs of $ 172 . The Common Shares were sold pursuant to a securities purchase agreement, dated April 26, 2023, between the Company and a fund managed by Kingdon Capital Management, LLC. On June 9, 2023, the Company issued 100,000 Common Shares under the Yorkville Equity Facility Financing Agreement (discussed below) in exchange for $488 in cash proceeds. The Company recorded a non-cash operating expense of $ 13 which represented the difference between the proceeds received and the fair value of the Common Shares issued based on Nasdaq closing price per Common Share on the issuance date. Fiscal Year 2022 Issuances On June 30, 2022, the Company closed a non-brokered private placement (the “June 2022 Private Placement”) of units (the “Units”) of the Company. A total of 498,103 Units were issued at a price per Unit of C$ 0.96 , for total gross proceeds to the Company of approximately C$ 4.8 million . Each Unit consists of one Common Share and one common share purchase warrant (“June 2022 Warrant”). Each June 2022 Warrant entitles the holder to acquire one Common Share at a price of C $ 1.10 at any time prior to July 1, 2024. Proceeds of the June 2022 Private Placement will be used for continued advancement of the Company’s Elk Creek Critical Minerals Project and for working capital and general corporate purposes. The Company paid cash commissions of C$ 62 and 6,510 warrants (the “Finder Warrants”), having the same terms as the June 2022 Warrants, to finders outside of the United States. The Finder Warrants were valued at C$ 18 using a risk-free rate of 3.2 %, expected volatility of 64 % and expected life of two years. b) Stock Options On November 5, 2020, the Company’s shareholders voted to approve an amendment and restatement of its long-term incentive plan (the “2017 Amended Long-Term Incentive Plan”) and the granting of incentive securities thereunder until November 5, 2023. Under the 2017 Amended Long-Term Incentive Plan, the Board may, in its discretion from time to time, grant Options and share units (in the form of restricted share units and performance 84 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) share units) to directors, employees and certain other service providers (as defined in the 2017 Amended Long-Term Incentive Plan) of the Company and affiliated entities selected by the Board. Subject to adjustment as described in the 2017 Amended Long-Term Incentive Plan, the aggregate number of Common Shares that may be reserved for issuance to participants under the 2017 Amended Long-Term Incentive Plan, together with all other security-based compensation arrangements of the Company, may not exceed 10% of the issued and outstanding Common Shares from time to time, and the Common Shares reserved for issuance upon settlement of share units will not exceed 5% of the issued and outstanding Common Shares from time to time. The 2017 Amended Long-Term Incentive Plan limits the maximum number of Common Shares issued to insiders (as defined under TSX rules for this purpose) within any one-year period, or issuable to insiders at any time, in the aggregate, under all security-based compensation arrangements (including the 2017 Amended Long-Term Incentive Plan) to 10% of the then issued and outstanding Common Shares. The 2017 Amended Long-Term Incentive Plan also limits the aggregate number of Common Shares that may be reserved for issuance to any one participant under the 2017 Amended Long-Term Incentive Plan, together with all other security-based compensation arrangements of the Company, to 5% of the then issued and outstanding Common Shares (on a non-diluted basis). Subject to the adjustment provisions of the 2017 Amended Long-Term Incentive Plan, the aggregate number of Common Shares actually issued or transferred by the Company upon the exercise of Incentive Stock Options will be limited as described above. The Board has power over the granting, amendment, administration, or settlement of any award. Stock option transactions are summarized as follows: Schedule of stock option Number of Options Weighted Average Exercise Price Balance, June 30, 2020 1,912,940 C$ 6.20 Granted 370,000 C$ 7.80 Exercised ( 295,229 ) C$ 6.10 Cancelled/expired ( 391,212 ) C$ 6.40 Balance, June 30, 2021 1,596,499 C$ 6.50 Granted 447,500 C$ 13.30 Exercised (205,153 ) C$ 7.00 Cancelled/expired ( 392,446 ) C$ 7.70 Balance, June 30, 2022 1,446,400 C$ 8.27 Granted 578,000 $ 6.95 Exercised ( 265,129 ) C$ 4.99 Cancelled/expired ( 217,771 ) C$ 5.87 Balance, June 30, 2023 1,541,500 C$ 9.64 85 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) The following table summarizes information about stock options outstanding at June 30, 2023: Exercise Price Expiry Date Number Outstanding Aggregate Intrinsic Value Number Exercisable Aggregate Intrinsic Value C$8.40 September 18, 2023 105,000 C$- 105,000 C$- C$5.40 November 15, 2023 208,500 263 208,500 263 C$7.50 December 14, 2023 170,000 - 170,000 - C$7.50 December 16, 2023 52,500 - 52,500 - C$13.60 December 17, 2024 377,500 - 377,500 - C$11.00 May 30, 2025 50,000 - 50,000 - $6.95 March 27, 2026 578,000 - 578,000 - Balance, June 30, 2023 1,541,500 C$ 263 1,541,500 C$ 263 The aggregate intrinsic value in the preceding table represents the total intrinsic value, based on the Company’s closing stock price of C$ 6.68 as of June 30, 2023, which would have been received by the option holders had all option holders exercised their options as of that date. The total number of in-the-money options vested and exercisable as of June 30, 2023, was 208,500. The total intrinsic value of options exercised during the year ended June 30, 2023, was C$ 1,592 . As of June 30, 2023, there were no unrecognized compensation costs related to unvested share-based compensation arrangements granted. The following table summarizes the weighted average information and assumptions used to determine option costs: Year ended June 30, 2023 2022 2021 Fair value per option granted during the period $ 3.09 C$ 4.90 C$ 2.50 Risk-free interest rate 3.30 % 1.33 % 0.26 % Expected dividend yield 0 % 0 % 0 % Expected stock price volatility (historical basis) 63.6 % 54.4 % 54.1 % Expected option life in years 3.0 3.0 3.0 c) Warrants Warrant transactions are summarized as follows. Weighted average exercise prices related to Canadian dollar denominated warrants were converted to U.S. dollars using end of period foreign currency exchange rates. Warrants Weighted Average Exercise Price Balance, June 30, 2020 1,237,645 $ 5.43 Granted: Nordmin warrants 50,000 6.45 Lind III warrants 855,800 7.83 April 2021 private placement 441,211 13.15 Exercised ( 910,628 ) 6.05 Expired ( 239,845 ) 5.89 Balance, June 30, 2021 1,434,183 9.36 Granted: June 2022 private placement 504,614 8.54 Exercised ( 87,175 ) 6.05 Balance, June 30, 2022 1,851,622 8.99 Granted: Yorkville financing warrants 1,789,267 8.94 GXII warrants 15,666,626 11.50 Expired ( 491,211 ) 11.67 Balance, June 30, 2023 18,816,304 $ 10.98 At June 30, 2023, the Company has outstanding exercisable warrants, as follows: Number Exercise Price Expiry Date 504,611 C$ 11.00 June 30, 2024 855,800 C$ 9.70 February 19, 2025 1,789,267 $ 8.94 (1) 15,666,626 $ 11.50 March 17, 2028 18,816,304 (1) Expires in 12 equal monthly tranches beginning October 17, 2023 86 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) In connection with the Closing, pursuant to the Business Combination Agreement, the Company assumed the GXII Warrant Agreement and each GXII Warrant thereunder that was issued and outstanding immediately prior to the Closing Date was converted into one NioCorp Assumed Warrant pursuant to the GXII Warrant Agreement, as amended by an Assignment, Assumption and Amendment Agreement, dated March 17, 2023, among the Company, GXII, Continental Stock Transfer & Trust Company, as the existing warrant agent, and Computershare Inc. and its affiliate, Computershare Trust Company, N.A, together as the successor warrant agent (the “NioCorp Assumed Warrant Agreement”). In connection with the Closing, NioCorp issued (a) 9,999,959 public NioCorp Assumed Warrants (the “Public Warrants”) 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”) 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. Each NioCorp Assumed Warrant entitles the holder to the right to purchase 1.11829212 Common Shares at an exercise price of $11.50 per 1.11829212 Common Shares (subject to adjustments for stock splits, stock dividends, reorganizations, recapitalizations and the like). No fractional shares will be issued upon exercise of any NioCorp Assumed Warrants, and fractional shares that would otherwise be due to the exercising holder will be rounded down to the nearest whole Common Share. In no event will the Company be required to net cash settle any NioCorp Assumed Warrant. Public Warrants The Company may elect to redeem the Public Warrants subject to certain conditions, in whole and not in part, at a price of $0.01 per Public Warrant if (i) 30 days’ prior written notice of redemption is provided to the holders, (ii) the last reported sale price of the Common Shares equals or exceeds approximately $16.10 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third business day prior to the date on which the Company sends the notice of redemption to the warrant holders and (iii) there is an effective registration statement covering the Common Shares issuable upon exercise of the Public Warrants, and a current prospectus relating thereto, available through the redemption date. Upon issuance of a redemption notice by the Company, the warrant holders will have until the redemption date to exercise for cash, or, at the Company’s election, on a cashless basis. The Public Warrants are not precluded from equity classification and are accounted for as such on the date of issuance, and each balance sheet date thereafter. Because the Transactions resulted in an excess of liabilities over assets acquired, no value was ascribed to the Public Warrants. Private Warrants The Private Warrants: (i) will be exercisable either for cash or on a cashless basis at the holder’s option and (ii) will not be redeemable by the Company, in either case as long as the Private Warrants are held by the Sponsor, its members or any of their permitted transferees (as prescribed in the NioCorp Assumed Warrant Agreement). In accordance with the NioCorp Assumed Warrant Agreement, any Private Warrants that are held by someone other than the Sponsor, its members or any their permitted transferees are treated as Public Warrants. The Company accounts for the Private Warrants assumed in the Transactions in accordance with the guidance contained in ASC 815-40. Such guidance provides that because the Private Warrants do not meet the criteria for equity treatment thereunder, each Private Warrant must be recorded as a liability. This liability is carried as a component of Warrant Liabilities on the consolidated balance sheet and is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to its current fair value, with the change in fair value recognized in the consolidated statement of operations and comprehensive loss. The Company will reassess the classification at each balance sheet date. The Company classifies Private Warrants as Level 2 instruments under the fair value hierarchy and estimated the fair value using a Black Scholes model with the following assumptions: 87 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) Key Valuation Input March 17, 2023 June 30, 2023 Stock price on valuation date $ 7.00 $ 5.03 Strike price $ 11.50 $ 11.50 Implied volatility of Public Warrants 19.5 % 33.5 % Risk free rate 3.47 % 4.18 % Dividend yield 0 % 0 % Expected warrant life in years 5.0 4.73 The change in the Private Warrants liability is presented below: Amount Initial valuation, March 17, 2023 $ 2,987 Change in valuation 292 Valuation at June 30, 2023 $ 3,279 d) Yorkville Equity Facility Financing Concurrent with the closing of the GXII Transaction, the Yorkville Equity Facility Financing became effective. Pursuant to the Yorkville Equity Facility Financing Agreement, Yorkville committed to purchase up to $65,000 of Common Shares (the “Commitment Amount”), at NioCorp’s direction from time to time for a period commencing upon the Closing Date and ending on the earliest of (i) the first day of the month next following the 36-month anniversary of the Closing, (ii) the date on which Yorkville shall have made payment of the full Commitment Amount and (iii) the date that the Yorkville Equity Facility Financing Agreement otherwise terminates in accordance with its terms (the “Commitment Period”), subject to certain limitations and the satisfaction of the conditions in the Yorkville Equity Facility Financing Agreement. The Common Shares that may be sold pursuant to the Yorkville Equity Facility Financing Agreement would be purchased by Yorkville at a purchase price equal to 97% of the daily volume-weighted average price of the Common Shares on Nasdaq or such other principal U.S. market for the Common Shares if the Common Shares are ever listed or traded on the New York Stock Exchange or the NYSE American as reported by Bloomberg Financial Markets (or, if not available, a similar service provider of national recognized standing) during the applicable pricing period, which is a period during a single trading day or a period of three consecutive trading days, at the Company’s option and subject to certain restrictions, in each case, defined based on when an Advance Notice (as defined in the Yorkville Equity Facility Financing Agreement) is submitted, subject to certain limitations. Pursuant to the terms of the Yorkville Equity Facility Financing Agreement, NioCorp issued 81,213 of Common Shares (the “Commitment Shares”) valued at $650 to Yorkville as consideration for its irrevocable commitment to purchase Common Shares under the Yorkville Equity Facility Financing Agreement. On June 9, 2023, NioCorp issued and sold 100,000 Common Shares to Yorkville under the Yorkville Equity Facility Financing Agreement. Additionally, NioCorp is required to pay Yorkville an aggregate fee of $1,500 in cash (the “Cash Fee”), including $500 that NioCorp paid on the Closing Date and an additional $250 NioCorp was paid as of June 30, 2023. NioCorp will pay the remaining $750 balance in installments over a 12-month period following the Closing Date, provided that it will have the right to prepay without penalty all or part of the remaining installments of the Cash Fee at any time. In addition, legal and other costs of $496 were incurred in connection with the Yorkville Equity Facility Financing and were expensed on the effective date. The following amounts related to the Yorkville Equity Facility Financing Agreement were expensed as other operating costs: Schedule of expenses as other operating costs Amount Yorkville Cash Fee $ 1,500 Fair value of Commitment Shares issued 650 Legal and other related costs 496 Net costs expensed to other operating expense $ 2,646 88 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) 12. RELATED PARTY TRANSACTIONS AND BALANCES Borrowings under the non-revolving credit facility agreement (the “Smith Credit Facility”) with Mark Smith, Chief Executive Officer, President, and Executive Chairman of NioCorp, bear interest at a rate of 10 % and drawdowns from the Smith Credit Facility are subject to a 2.5 % establishment fee. Amounts outstanding under the Smith Credit Facility are secured by all of the Company’s assets pursuant to a general security agreement. The Smith Credit Facility contains financial and non-financial covenants customary for a facility of its size and nature. The maturity date for the Smith Credit Facility was June 30, 2023. On February 28, 2023, the Smith Credit facility was amended to increase the borrowing limit to $ 4,000 from the previous limit of $ 3,500 . The Company subsequently drew down $ 1,130 , leaving an available balance under the Smith Credit Facility of $ 52 . Changes in the Smith Credit Agreement principal balance are as follows: For the year ending June 30, 2023 2022 Beginning balance $ 2,000 $ 2,318 Amounts advanced 1,130 - Repayments ( 3,130 ) ( 318 ) Balance, end of period $ - $ 2,000 On March 22, 2023, the Company repaid Mr. Smith $ 1,841 of principal borrowed under the Smith Credit Facility. This repayment was made out of funds transferred to the Company from the GXII trust account on the Closing Date. The Company repaid the remaining principal balance of $ 1,289 on May 31, 2023. The Smith Credit Facility expired on June 30, 2023. Accounts payable and accrued liabilities as of June 30, 2023 includes $ 28 of origination fees payable under the Smith Credit Agreement. During fiscal year 2023 and 2022, the Company paid a total of $ 183 and $ 252 , respectively, representing accrued interest on the Smith Credit Agreement. 13. EXPLORATION EXPENDITURES Schedule of exploration expenditures For the year ended June 30, 2023 2022 2021 Feasibility study and engineering $ 410 $ 334 $ 79 Field management and other 738 569 656 Metallurgical 4,174 2,218 272 Geologists and field staff 26 188 49 Total $ 5,348 $ 3,309 $ 1,056 14. LEASES Effective February 2023, the Company entered into a 39-month corporate office lease extension and recognized the corresponding ROU asset and lease liability of $198 associated with this extension, based on a discount rate of 16 %. As of June 30, 2023 and 2022, the Company had one corporate office lease with a remaining lease term of 3.6 years and 1.3 years, respectively. During the year ended June 30, 2023 and 2022, operating cash flows included cash payments of $ 93 and $ 90 , respectively related to the measurement of lease liabilities. 89 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) The Company incurred lease costs as follows: For the year ended June 30, 2023 2022 2021 Operating Lease Cost: Fixed rent expense $ 83 $ 83 $ 106 Variable rent expense 13 12 7 Short term lease cost 10 16 13 Sublease income ( 33 ) ( 26 ) ( 18 ) Net lease cost $ 73 $ 85 $ 108 Lease cost – other operating expense $ 73 $ 85 $ 89 Lease cost – exploration expenditures - - 19 Net lease cost $ 73 $ 85 $ 108 The maturity of lease liabilities is as follows at June 30, 2023: Fiscal Year Lease Maturities 2024 $ 71 2025 96 2026 98 2027 50 Total lease payments 315 Less amount of payments representing interest ( 80 ) Present value of lease payments 235 Less current portion of operating lease liability ( 71 ) Noncurrent operating lease liability $ 164 15. INCOME TAXES Domestic and foreign components of loss before income taxes for the years ended June 30, 2023, 2022, and 2021 are as follows: For the year ended June 30, 2023 2022 2021 Canada $ 34,606 $ 6,918 $ 3,362 United States 6,006 3,969 1,462 Total $ 40,612 $ 10,887 $ 4,824 90 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) The following table is a reconciliation of income taxes at statutory rates: For the year ended June 30, 2023 2022 2021 Loss before income taxes $ 40,612 $ 10,887 $ 4,824 Combined federal and provincial statutory income tax rate 27 % 27 % 27 % Income tax benefit at statutory tax rates 10,965 2,940 1,303 Foreign rate differential ( 131 ) ( 72 ) ( 31 ) Earnout shares liability ( 2,841 ) - - Warrant liability ( 1,518 ) - - GXII transaction costs ( 925 ) - - Share based compensation ( 412 ) ( 462 ) ( 212 ) Accretion expense ( 496 ) ( 407 ) ( 158 ) Loss on debt extinguishment ( 54 ) - - Capital loss rate differential ( 2 ) ( 38 ) 182 Change in estimates related to prior years 14 ( 274 ) 739 Other 45 26 18 Change in valuation allowance ( 4,341 ) ( 1,713 ) ( 1,841 ) Income tax benefit $ 304 $ - $ - Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of deferred taxes are as follows: As of June 30, 2023 2022 Deferred tax assets Net operating losses available for future periods $ 11,893 $ 8,977 Mineral interests 9,477 9,477 Startup and organizational costs 2,132 - Research and development costs 1,060 - Share issuance costs 446 - Capital losses available for future periods 419 420 Other 36 74 Total deferred tax assets 25,463 18,948 Valuation allowance ( 25,463 ) ( 18,948 ) Net deferred tax assets $ - $ - During the year ended June 30, 2022, we identified errors in the recognition of capital losses related to realized mineral property write downs and foreign exchange gains and losses in Canada which resulted in changes to capital losses available for future periods and other of $ ( 221 ) and $ ( 3 ) , respectively. These changes primarily related to adjustments to deferred tax assets recorded during fiscal year 2021. In addition, during the year ended June 30, 2022, we identified an error in the recognition of net operating losses related to disallowed interest expense for the prior year which resulted in a decrease to net operating loss carryforwards of $ 19 . After evaluation and consideration of the full valuation allowance historically applied against total deferred tax assets, we determined that the impact of the adjustments was not material to the previously issued consolidated financial statements, nor are the out of period adjustments material to the estimated results for the year ended June 30, 2022. Changes in the valuation allowance are as follows: For the year ended June 30, 2023 2022 Valuation allowance, beginning of year $ ( 18,948 ) $ ( 17,235 ) Current year additions ( 4,341 ) ( 1,713 ) Startup and organizational costs acquired ( 2,174 ) - Valuation allowance, end of year $ ( 25,463 ) $ ( 18,948 ) 91 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) The Company acquired a federal income tax payable of $ 406 in connection with the GXII Transaction. As a result of a post-transaction loss at ECRC, a partial release of the valuation allowance attributed to the reduction of the acquired federal income tax payable of $304 has been recorded as an income tax benefit in the consolidated statement of operations and comprehensive loss for the year ended June 30, 2023. The Company establishes a valuation allowance against future income tax assets if, based on available information, it is more likely than not that all of the assets will not be realized. The valuation allowance of $ 25,463 at June 30, 2023, relates mainly to net operating loss carryforwards in Canada and mineral interests due to deferred exploration expenditures in the United States, where the utilization of such attributes is not more likely than not. The Company has the following cumulative net operating losses for Canadian and U.S. income tax purposes and these carryforwards will generally expire between 2026 and 2043. As a result of the Tax Cuts and Jobs Act of 2017, U.S. tax losses incurred for tax years ending on and after June 30, 2019, totaling $ 2,510 , have no expiration.. Schedule of cumulative net operating losses As of June 30, Jurisdiction 2023 2022 Canada $ 40,267 $ 31,551 United States 3,491 2,460 Total $ 43,758 $ 34,011 In addition, the Company has a Canadian capital loss carryforward of $ 3,375 as of June 30, 2023, which has no expiration date and can be used to offset future capital gains, and U.S. state net operating loss carryforwards of $ 4,943 as of June 30, 2023 which generally expire between 2031 and 2043. The Company had no unrecognized tax benefits as of June 30, 2023 or 2022. The Company recognizes interest accrued related to unrecognized tax benefits and penalties in its income tax provision. The Company has not recognized any interest or penalties in the fiscal years presented in these consolidated financial statements. The Company is subject to income tax in the U.S. federal jurisdiction and Canada. Certain years remain subject to examination but there are currently no ongoing exams in any taxing jurisdictions. 16. FAIR VALUE MEASUREMENTS The Company measures the fair value of financial assets and liabilities based on U.S. GAAP guidance which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The Company classifies financial assets and liabilities as held-for-trading, available-for-sale, held-to-maturity, loans and receivables, or other financial liabilities depending on their nature. Financial assets and financial liabilities are recognized at fair value on their initial recognition. Financial assets and liabilities classified as held-for-trading are measured at fair value, with gains and losses recognized in net income. Financial assets classified as held-to-maturity, loans and receivables, and financial liabilities other than those classified as held-for-trading are measured at amortized cost, using the effective interest method of amortization. Financial assets classified as available-for-sale, including investments in equity securities, are measured at fair value, with unrealized gains and losses being recognized in income. Financial instruments including receivables, accounts payable and accrued liabilities, and related party loans are carried at amortized cost, which management believes approximates fair value due to the short-term nature of these instruments. The following tables present information about the assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2023, and June 30, 2022, respectively, and indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical instruments. Fair values determined by Level 2 inputs utilize data points that are observable, such as quoted prices, interest rates, and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the financial instrument and include situations where there is little, if any, market activity for the instrument. 92 NioCorp Developments Ltd. Notes to Consolidated Financial Statements June 30, 2023 (expressed in thousands of U.S. dollars, except share and per share data) Schedule of fair values determined by level 3 inputs are unobservable data As of June 30, 2023 Note Total Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 2,341 $ 2,341 $ - $ - Investment in equity securities 9 9 - - Total $ 2,350 $ 2,350 $ - $ - Liabilities: Earnout Shares liability 10 $ 10,521 $ - $ - $ 10,521 Warrant liabilities 9,11c 4,989 - 3,279 1,710 Total $ 15,510 $ - $ 3,279 $ 12,231 As of June 30, 2022 Total Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 5,280 $ 5,280 $ - $ - Investment in equity securities 10 10 - - Total $ 5,290 $ 5,290 $ - $ - The Yorkville Convertible Debt Financing discussed in Note 9 was initially recorded at fair value, which represented a nonrecurring fair value measurement using a Level 3 input. At June 30, 2023, the estimated fair value of this instrument approximated carrying value given that the instrument was issued in March 2023 and has a short time period until maturity. 17. SUBSEQUENT EVENTS On September 1, 2023, the Company closed a non-brokered private placement (the “September 2023 Private Placement”) of units of the Company (the “September 2023 Units”). A total of 250,000 September 2023 Units were issued at a price per September 2023 Unit of $4.00, for total gross proceeds to the Company of $1.0 million. Each September 2023 Unit consists of one Common Share and one Common Share purchase warrant (“September 2023 Warrant”). Each September 2023 Warrant entitles the holder to acquire one Common Share at a price of $4.60 at any time prior to September 1, 2025. Proceeds of the September 2023 Private Placement will be used for continued advancement of the Company’s Elk Creek Critical Minerals Project and for working capital and general corporate purposes. On September 12 and September 18, 2023, the Company issued 70,000 and 75,000 Common Shares, respectively, under the Yorkville Equity Facility Financing Agreement in exchange for $ 0.5 million in gross cash proceeds. 93 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None.