NIOCORP DEVELOPMENTS LTD 10-Q

ITEM 1. FINANCIAL STATEMENTS Contents Page Condensed consolidated balance sheets as of December 31, 2023 and June 30, 2023 (unaudited) 2 Condensed consolidated statements of operations and comprehensive loss for the three and six months ended December 31, 2023 and 2022 (unaudited) 3 Condensed consolidated statements of cash flows for the six months ended December 31, 2023 and 2022 (unaudited) 4 Condensed consolidated statements of shareholders’ (deficit) equity and redeemable noncontrolling interest for the three and six months ended December 31, 2023 and 2022 (unaudited) 5 Notes to condensed consolidated financial statements (unaudited) 6 - 15 1 NioCorp Developments Ltd. Condensed Consolidated Balance Sheets (expressed in thousands of U.S. dollars, except share data) (unaudited) As of Note December 31, 2023 June 30, 2023 ASSETS Current Cash and cash equivalents $ 634 $ 2,341 Prepaid expenses and other 432 1,385 Total current assets 1,066 3,726 Non-current Deposits 35 35 Investment in equity securities 7 9 Right-of-use assets 209 236 Land and buildings, net 838 839 Mineral properties 16,085 16,085 Total assets $ 18,240 $ 20,930 LIABILITIES Current Accounts payable and accrued liabilities 4 $ 4,001 $ 3,491 Convertible debt, current portion 5 5,506 - Warrant liability, at fair value 7c 2,093 - Operating lease liability 9 95 71 Total current liabilities 11,695 3,562 Non-current Convertible debt - 10,561 Warrant liabilities, at fair value 7c 3,040 4,989 Earnout Shares liability, at fair value 6 7,622 10,521 Operating lease liability 9 135 164 Total liabilities 22,492 29,797 Commitments and contingencies 9 Redeemable noncontrolling interest 1,830 2,100 SHAREHOLDERS’ DEFICIT Common shares, no par value, unlimited shares authorized; 34,091,844 and 31,202,131 shares outstanding, respectively 7 151,810 140,421 Accumulated deficit ( 156,981 ) ( 150,477 ) Accumulated other comprehensive loss ( 911 ) ( 911 ) Total shareholders’ deficit ( 6,082 ) ( 10,967 ) Total liabilities, redeemable noncontrolling interest, and shareholders’ deficit $ 18,240 $ 20,930 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 NioCorp Developments Ltd. Condensed Consolidated Statements of Operations and Comprehensive Loss (expressed in thousands of U.S. dollars, except share and per share data) (unaudited) For the Three Months Ended December 31, For the Six Months Ended December 31, Note 2023 2022 2023 2022 Operating expenses Employee related costs $ 328 $ 291 $ 650 $ 584 Professional fees 952 262 2,139 426 Exploration expenditures 8 828 1,317 1,928 2,605 Other operating expenses 809 331 1,643 668 Total operating expenses 2,917 2,201 6,360 4,283 Other gain - ( 13 ) - ( 13 ) Change in fair value of Earnout Shares liability 6 ( 806 ) - ( 2,899 ) - Change in fair value of warrant liability 7c 71 341 144 84 Debt extinguishment - - - 1,622 Foreign exchange loss (gain) 28 ( 64 ) 17 109 Interest expense (income) 5 1,176 ( 38 ) 3,251 220 Loss on equity securities 1 2 2 1 Loss before income taxes 3,387 2,429 6,875 6,306 Income tax benefit - - ( 101 ) - Net loss 3,387 2,429 6,774 6,306 Net loss attributable to redeemable noncontrolling interest 96 - 270 - Net loss attributable to the Company 2d $ 3,291 $ 2,429 $ 6,504 $ 6,306 Other comprehensive loss: Net loss $ 3,387 $ 2,429 $ 6,774 $ 6,306 Other comprehensive loss: Reporting currency translation - 25 - 30 Total comprehensive loss 3,387 2,454 6,774 6,336 Comprehensive loss attributable to redeemable noncontrolling interest 96 - 270 - Comprehensive loss attributable to the Company $ 3,291 $ 2,454 $ 6,504 $ 6,336 Loss per common share, basic and diluted 2d $ 0.09 $ 0.09 $ 0.18 $ 0.23 Weighted average common shares outstanding, basic and diluted 33,255,557 28,056,263 32,555,092 27,924,447 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 NioCorp Developments Ltd. Condensed Consolidated Statements of Cash Flows (expressed in thousands of U.S. dollars) (unaudited) For the Six Months Ended December 31, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net loss for the period $ ( 6,774 ) $ ( 6,306 ) Adjustments for: Change in fair value of Earnout Shares liability ( 2,899 ) - Change in fair value of warrant liabilities 144 84 Accretion of convertible debt 3,251 121 Loss on debt extinguishment - 1,622 Fair value of private placement warrants 102 - Loss on Yorkville equity facility shares issued 63 - Foreign exchange loss - 151 Gain on sale of assets - ( 13 ) Depreciation 1 1 Unrealized loss on equity securities 2 1 Non-cash lease activity 22 ( 4 ) Total ( 6,088 ) ( 4,343 ) Change in working capital items: Prepaid expenses and other 953 289 Accounts payable and accrued liabilities 510 ( 70 ) Net cash used in operating activities ( 4,625 ) ( 4,124 ) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of assets - 21 Net cash provided by investing activities - 21 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of capital stock 3,054 11 Share issue costs ( 136 ) ( 21 ) Payment of deferred transaction costs - ( 537 ) Net cash provided by (used in) financing activities 2,918 ( 547 ) Exchange rate effect on cash and cash equivalents - ( 206 ) Change in cash and cash equivalents during period ( 1,707 ) ( 4,856 ) Cash and cash equivalents, beginning of period 2,341 5,280 Cash and cash equivalents, end of period $ 634 $ 424 Supplemental cash flow information: Amounts paid for interest $ - $ - Amounts paid for income taxes - - Non-cash investing and financing transactions: Conversion of debt for common shares $ 8,306 $ 1,950 Deferred transaction costs, accrued but not paid - 3,800 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 NioCorp Developments Ltd. Condensed Consolidated Statements of Shareholders’ (Deficit) Equity and Redeemable Noncontrolling Interest (expressed in thousands of U.S. dollars, except for share amounts) (unaudited) Common Shares Outstanding Common Stock Accumulated Deficit Accumulated Other Comprehensive Loss Total Redeemable Noncontrolling Interest Balance, September 30, 2022 27,939,322 $ 130,684 $ ( 114,274 ) $ ( 998 ) $ 15,412 $ - Exercise of options 260,581 11 - - 11 - Debt conversions 42,160 300 - - 300 - Foreign currency translation adjustment - - - ( 25 ) ( 25 ) - Loss for the period - - ( 2,429 ) - ( 2,429 ) - Balance, December 31, 2022 28,242,063 $ 130,995 $ ( 116,703 ) $ ( 1,023 ) $ 13,269 $ - Balance, September 30, 2023 32,913,419 $ 147,697 $ ( 153,690 ) $ ( 911 ) $ ( 6,904 ) $ 1,926 Exercise of options 7,800 - - - - - Private placement 413,432 1,393 - - 1,393 - Yorkville equity facility draws 75,000 244 - - 244 - Debt conversions 682,193 2,577 - - 2,577 - Share issuance costs - ( 101 ) - - ( 101 ) - Loss for the period - - ( 3,291 ) - ( 3,291 ) ( 96 ) Balance, December 31, 2023 34,091,844 $ 151,810 $ ( 156,981 ) $ ( 911 ) $ ( 6,082 ) $ 1,830 Common Shares Outstanding Common Stock Accumulated Deficit Accumulated Other Comprehensive Loss Total Redeemable Noncontrolling Interest Balance, June 30, 2022 27,667,060 $ 129,055 $ ( 110,397 ) $ ( 993 ) $ 17,665 $ - Exercise of options 260,581 11 - - 11 - Debt conversions 314,422 1,950 - - 1,950 - Share issuance costs - ( 21 ) - - ( 21 ) - Foreign currency translation adjustment - - - ( 30 ) ( 30 ) - Loss for the period - - ( 6,306 ) - ( 6,306 ) - Balance, December 31, 2022 28,242,063 $ 130,995 $ ( 116,703 ) $ ( 1,023 ) $ 13,269 $ - Balance, June 30, 2023 31,202,131 $ 140,421 $ ( 150,477 ) $ ( 911 ) $ ( 10,967 ) $ 2,100 Exercise of options 7,800 - - - - - Private placements 663,432 2,393 - - 2,393 - Yorkville equity facility draws 220,000 829 - - 829 - Debt conversions 1,998,481 8,306 - - 8,306 - Share issuance costs - ( 139 ) - - ( 139 ) - Loss for the period - - ( 6,504 ) - ( 6,504 ) ( 270 ) Balance, December 31, 2023 34,091,844 $ 151,810 $ ( 156,981 ) $ ( 911 ) $ ( 6,082 ) $ 1,830 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements December 31, 2023 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) 1. DESCRIPTION OF BUSINESS NioCorp Developments Ltd. (“we,” “us,” “our,” “NioCorp” or the “Company”) 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 development-stage property (the “Elk Creek Project”) located in southeastern Nebraska. In October 2023, NioCorp Technologies Ltd. (“Technologies”), a wholly owned subsidiary of the Company, was incorporated in the United Kingdom (the “UK”). The initial capital contribution in Technologies was £100 for 100 ordinary shares. Technologies was formed to provide the ability to take advantage of various business opportunities in the UK, including research and development of aluminum-scandium alloys. These interim condensed 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 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 3, 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 The accompanying interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles of the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). The interim condensed consolidated financial statements include the consolidated accounts of the Company and its wholly owned subsidiaries with all significant intercompany transactions eliminated. The accounting policies followed in preparing these interim condensed consolidated financial statements are those used by the Company as set out in the audited consolidated financial statements for the year ended June 30, 2023. Certain transactions include reference to Canadian dollars (“C$”) where applicable. In the opinion of management, all adjustments considered necessary (including normal recurring adjustments) for a fair statement of the financial position, results of operations, and cash flows at December 31, 2023, and for all periods presented, have been included in these interim condensed consolidated financial statements. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to appropriate SEC rules and regulations. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended June 30, 2023. The interim results are not necessarily indicative of results for the full year ending June 30, 2024, or future operating periods. b) Recent Accounting Standards Issued and Not Effective In October 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-06, Disclosure Improvements - Codification Amendment in Response to the SEC’s Disclosure Update and Simplification Initiative . The amendments in this update modify the disclosure or presentation requirements of a variety of Topics in the Accounting Standards Codification (“ASC”) in response to the SEC’s Release No. 33-10532, 6 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements December 31, 2023 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) Disclosure Update and Simplification Initiative, and align the ASC’s requirements with the SEC’s regulations. For entities subject to the SEC’s existing disclosure requirements, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the ASC and not become effective. Early adoption is prohibited. We are currently in the process of evaluating the impact of the amendment on our consolidated financial statements and related disclosures. In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The amendments will require public entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker and included within segment profit and loss. The amendments are effective for the Company’s annual periods beginning July 1, 2024, and interim periods beginning July 1, 2025, with early adoption permitted, and will be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the ASU to determine its impact on the Company’s disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for the Company’s annual periods beginning June 1, 2025, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the ASU to determine its impact on the Company’s disclosures. 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. c) 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 financial statements, and the reported amounts of expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the carrying value of long-term assets, deferred income tax assets and related valuations, liabilities related to the Earnout Shares, Private Warrants, and Contingent Consent Warrants (each, as defined below), 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. d) Basic and Diluted Earnings per Share 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: 7 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements December 31, 2023 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) For the Three Months Ended December 31, For the Six Months Ended December 31, 2023 2022 2023 2022 Net loss $ 3,387 2,429 $ 6,774 $ 6,306 Adjust: Net loss attributable to noncontrolling interest ( 96 ) - ( 270 ) - Net loss available to participating securities 3,291 2,429 6,504 6,306 Net loss attributable to vested shares of ECRC Class B common stock ( 321 ) - ( 580 ) - Net loss attributed to common shareholders - basic and diluted $ 2,970 2,429 $ 5,924 $ 6,306 Denominator: Weighted average shares outstanding – basic and diluted 33,255,557 28,056,263 32,555,092 27,924,447 Loss per Common Share outstanding – basic and diluted $ 0.09 0.09 $ 0.18 $ 0.23 The following common shares, no par value, of the Company (“Common Shares”) underlying options to purchase Common Shares (“Options”), Common Share purchase warrants (“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 three- and six-month periods indicated below. Schedule of excluded from the dilutive securities For the Three and Six Months Ended December 31, Excluded potentially dilutive securities (1)(2) : 2023 2022 Options 938,000 996,000 Warrants 19,032,421 1,801,624 Convertible debt 2,089,860 81,600 Total potential dilutive securities 22,060,281 2,879,224 (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 are excluded as the vesting terms were not met as of the end of the reporting period. 3. GOING CONCERN The Company incurred a loss of $ 6,774 for the six months ended December 31, 2023 (2022 - $ 6,306 ) and had a working capital deficit of $ 10,629 and an accumulated deficit of $ 156,981 as of December 31, 2023. As a development stage issuer, the Company has not yet commenced its mining operations and accordingly does not generate any revenue. As of December 31, 2023, the Company had cash of $ 634 , which will not be sufficient to fund normal operations for the next twelve months. These conditions and events raise substantial doubt about the Company’s ability to continue as a going concern. In response to these conditions and events, the Company plans to obtain additional financing. NioCorp expects to have access to up to $ 61,796 in net proceeds from the Standby Equity Purchase Agreement, dated January 26, 2023 (the “Yorkville Equity Facility Financing Agreement”), between 8 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements December 31, 2023 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) the Company and YA II PN, Ltd., an investment fund managed by Yorkville Advisors Global, LP (“Yorkville”), through April 1, 2026. In addition, the Company may pursue 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 December 31, 2023. The Company’s plans to obtain additional financing have not been finalized, are subject to market conditions, and are not within the Company’s control and therefore cannot be deemed probable. Further, the Company will be required to raise additional funds for the construction and commencement of operations. As a result, the Company has concluded that management’s plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern. These interim condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. 4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Schedule of account payable and accrued liabilities As of December 31, 2023 June 30, 2023 Accounts payable, trade $ 3,160 $ 1,990 Trade payable accruals 765 1,324 Income taxes payable - 101 Environmental accruals 48 48 Loan origination fees payable to related party 28 28 Total accounts payable and accrued liabilities $ 4,001 $ 3,491 5. CONVERTIBLE DEBT The unsecured convertible debentures (the “Convertible Debentures”) issued to Yorkville pursuant to the Securities Purchase Agreement, dated January 26, 2023 (as amended, the “Yorkville Convertible Debt Financing Agreement”), between the Company and Yorkville, have a maturity date of September 17, 2024 , and are classified as a current liability as of December 31, 2023. Changes in the Convertible Debentures are as follows: Changes in the Convertible Debentures are as follows Amount Opening balance, June 30, 2023 $ 10,561 Accretion expense 3,251 Principal and accrued interest converted ( 8,306 ) Balance, December 31, 2023 $ 5,506 Add: Unamortized debt issuance costs 494 Remaining principal balance, December 31, 2023 $ 6,000 Based on the Company’s closing Common Share price of $ 3.19 as of December 31, 2023, conversion of the remaining Convertible Debenture balance, including accrued interest, would require the issuance of approximately 2,089,860 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 67,600 shares. 9 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements December 31, 2023 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) 6. CLASS B COMMON STOCK OF ECRC The shares of Class B common stock of Elk Creek Resource Corporation (“ECRC”), an indirect, majority-owned subsidiary of NioCorp formerly known as GX Acquisition Corp. II (“GXII”), the rights of the holders of which to exchange such shares into Common Shares are subject to certain vesting conditions (such shares of ECRC Class B common stock, the “Earnout Shares”), were valued utilizing a Monte Carlo Simulation pricing model with the following primary inputs: Key Valuation Input December 31, 2023 June 30, 2023 Closing Common Share price $ 3.19 $ 5.03 Term (expiry) March 17, 2033 March 17, 2033 Volatility 54.8 % 33.5 % Risk-free rate 3.88 % 3.83 % The following table sets forth a summary of the changes in the fair value of the Earnout Shares liability for the three- and six-month periods ended December 31, 2023: Amount Fair value as of June 30, 2023 $ 10,521 Change in fair value ( 2,093 ) Fair value as of September 30, 2023 8,428 Change in fair value ( 806 ) Fair value as of December 31, 2023 $ 7,622 7. COMMON SHARES a) Issuance 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 $ 1,000 . Each September 2023 Unit consists of one Common Share and one 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. The September 2023 Warrants were classified as an equity instrument and accordingly, the net proceeds of $ 962 were allocated based on the relative fair values of the Common Shares and the September 2023 Warrants on the date of issuance. The amount allocated to the fair value of the September 2023 Warrants was $ 254 and the balance of the proceeds of $ 708 was allocated to the Common Shares. The fair value of the September 2023 Warrants issued was computed using the Black Scholes option pricing model using the following assumptions: an expected life of 2.0 years, a risk-free interest rate of 4.85 %, an expected volatility of 71.63 %, and an expected dividend rate of 0 %. On December 22, 2023, the Company closed a non-brokered private placement (the “December 2023 Private Placement”) of 413,432 units of the Company (the “December 2023 Units”). Each December 2023 Unit consists of one Common Share and one Warrant (“December 2023 Warrant”). Each December 2023 Warrant entitles the holder to acquire one Common Share at a price of $ 3.54 at any time until December 22, 2025. 274,587 of the December 2023 Units were issued and sold to certain accredited investors, who are not affiliated 10 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements December 31, 2023 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) with the Company but with whom the Company had a pre-existing relationship, at a price of $ 3.08 per December 2023 Unit, and 138,845 of the December 2023 Units were issued and sold to certain officers and directors of the Company (the “Insider Investors”), at a price of $ 3.205 per December 2023 Unit. The price per December 2023 Unit paid by the Insider Investors included $0.125 per December 2023 Warrant underlying each December 2023 Unit purchased by the Insider Investors which allowed the Insider Investors to participate in the December 2023 Private Placement in accordance with the rules of The Nasdaq Stock Market LLC (“Nasdaq”). The Company received aggregate gross proceeds from the December 2023 Private Placement of approximately $ 1,290 . Proceeds of the December 2023 Private Placement will be used for continued advancement of the Elk Creek Project and for working capital and general corporate purposes. The Company recorded a non-cash expense of $ 92 and $ 10 to other operating expense and employee related costs, respectively, representing the excess of fair value of the December 2023 Units over the purchase price paid by Insider Investors. The December 2023 Warrants were classified as an equity instrument and accordingly, the estimated net proceeds of $ 1,241 were allocated based on the relative fair values of the Common Shares and the December 2023 Warrants on the date of issuance. The amount allocated to the fair value of the December 2023 Warrants was $ 264 and the balance of the proceeds of $ 977 was allocated to the Common Shares. The fair value of the December 2023 Warrants issued was computed using the Black Scholes option pricing model using the following assumptions: an expected life of 2.0 years, a risk-free interest rate of 4.33 %, an expected volatility of 54.8 %, and an expected dividend rate of 0 %. The Company issued the following Common Shares under the Yorkville Equity Facility Financing Agreement during the six months ended December 31, 2023: Date Common Shares Issued Gross Funds Received Market Value of Shares Issued Loss on Transaction September 12, 2023 70,000 $ 259 $ 271 $ 12 September 18, 2023 75,000 273 314 41 November 30, 2023 75,000 234 244 10 Loss on transaction represents a non-cash expense equal to the difference between the proceeds received and the fair value of the Common Shares issued based on the Nasdaq closing price per Common Share on the issuance date and is recorded in other operating expenses in the consolidated statement of operations and comprehensive loss. b) Stock Options Schedule of stock options Number of Options Weighted Average Exercise Price Balance, June 30, 2023 1,541,500 C$ 9.64 Exercised ( 7,800 ) 5.40 Cancelled/expired ( 595,700 ) 7.37 Balance, December 31, 2023 938,000 C$ 11.12 The following table summarizes information about Options outstanding at December 31, 2023: Exercise Price Expiry Date Number Outstanding Aggregate Intrinsic Value Number Exercisable Aggregate Intrinsic Value C$ 13.60 December 17, 2024 350,000 - 350,000 - C$ 11.00 May 30, 2025 50,000 - 50,000 - C$ 9.52 March 27, 2026 538,000 - 538,000 - 938,000 $ - 938,000 $ - 11 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements December 31, 2023 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) c) Warrants Schedule of warrant transactions Number of Warrants Weighted Average Exercise Price Balance, June 30, 2023 18,816,304 $ 10.98 Granted 663,432 3.94 Exercised - - Cancelled ( 447,315 ) 8.94 Balance, December 31, 2023 19,032,421 $ 10.78 At December 31, 2023, the Company had outstanding exercisable Warrants, as follows: Number Exercise Price Expiry Date 504,611 C$ 11.00 June 30, 2024 1,341,952 $ 8.94 (1) 855,800 C$ 9.70 February 19, 2025 250,000 $ 4.60 September 1, 2025 413,432 $ 3.54 December 22, 2025 15,666,626 $ 11.50 March 17, 2028 19,032,421 (1) These Warrants expire in equal monthly tranches from January 17, 2024 through September 17, 2024 Private Warrants In connection with the closing of the previously publicly disclosed business combination transaction on March 17, 2023 (the “Closing”), the Company assumed GXII’s obligations under the agreement governing the GXII Warrants, as amended by an assignment, assumption and amendment agreement (the “NioCorp Assumed Warrant Agreement”), and issued an aggregate of 15,666,626 Warrants (the “NioCorp Assumed Warrants”). The Company 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 GX Sponsor II LLC (the “Sponsor”). Each Private 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 Private 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 Private Warrant. 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. 12 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements December 31, 2023 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) The Company classifies Private Warrants as Level 2 instruments under the fair value hierarchy as inputs into our pricing model are based on observable data points. The following observable data points were used in calculating the fair value of the Private Warrants using a Black Scholes model: Key Valuation Input December 31, 2023 June 30, 2023 Stock price on valuation date $ 3.19 $ 5.03 Strike price $ 11.50 $ 11.50 Implied volatility of Public Warrants 54.8 % 33.5 % Risk free rate 3.91 % 4.18 % Dividend yield 0 % 0 % Expected warrant life in years 4.22 4.73 The change in the Private Warrants liability is presented below: Amount Fair value at June 30, 2023 $ 3,279 Change in fair value ( 181 ) Fair value at September 30, 2023 $ 3,098 Change in fair value ( 58 ) Fair value at December 31, 2023 $ 3,040 Contingent Consent Warrants As consideration for entering into the previously publicly disclosed Waiver and Consent Agreement, dated September 25, 2022 (the “Lind Consent”), between the Company and Lind Global Asset Management III, LLC (“Lind”), Lind received, amongst other things, the right to receive additional Warrants (the “Contingent Consent Warrants”) if on September 17, 2024, 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, 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 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 the balance sheet date and the probability of issuance calculated by the model. Key Valuation Input December 31, 2023 June 30, 2023 Share price on valuation date $ 3.19 $ 5.03 Volatility 64.0 % 63.0 % Risk free rate 3.86 % 4.11 % Probability of issuance 96.6 % 80.8 % 13 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements December 31, 2023 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) The change in the fair value of the Contingent Consent Warrants is presented below: Amount Fair value at June 30, 2023 $ 1,710 Change in fair value 254 Fair value at September 30, 2023 1,964 Change in fair value 129 Fair value at December 31, 2023 $ 2,093 The measurement date for the potential issuance of Contingent Consent Warrants is September 17, 2024, and therefore, as of December 31, 2023, the Contingent Consent Warrants are classified as a current liability. 8. EXPLORATION EXPENDITURES Schedule of exploration expenditures For the Three Months Ended December 31 For the Six Months Ended December 31, 2023 2022 2023 2022 Technical studies and engineering $ 97 $ 28 $ 297 $ 137 Field management and other 147 207 282 393 Metallurgical development 584 1,080 1,330 2,073 Geologists and field staff - 2 19 2 Total $ 828 $ 1,317 $ 1,928 $ 2,605 9. LEASES The Company incurred lease costs as follows: For the Three Months Ended December 31, For the Six Months Ended December 31, 2023 2022 2023 2022 Operating Lease Cost: Fixed rent expense $ 23 $ 23 $ 45 $ 43 Variable rent expense 3 3 7 5 Short-term lease cost 2 3 5 9 Sublease income ( 10 ) ( 12 ) ( 16 ) ( 15 ) Net lease cost – other operating expense $ 18 $ 17 $ 41 $ 42 The maturities of lease liabilities are as follows at December 31, 2023: Future Lease Maturities Total remaining lease payments $ 291 Less portion of payments representing interest ( 61 ) Present value of lease payments 230 Less current portion of lease payments 95 Non-current lease liability $ 135 14 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements December 31, 2023 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) 10. FAIR VALUE MEASUREMENT The following tables present information about the assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2023, and June 30, 2023, 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. Schedule of fair values determined by level 3 inputs are unobservable data As of December 31, 2023 Note Total Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 634 $ 634 $ - $ - Investment in equity securities 7 7 - - Total $ 641 $ 641 $ - $ - Liabilities: Earnout Shares liability 6 $ 7,622 $ - $ - $ 7,622 Warrant liabilities 7c 5,133 - 3,098 2,035 Total $ 12,755 $ - $ 3,098 $ 9,657 As of June 30, 2023 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 $ 10,521 $ - $ - $ 10,521 Warrant liabilities 4,989 - 3,279 1,710 Total $ 15,510 $ - $ 3,279 $ 12,231 The Convertible Debentures discussed in Note 5 were initially recorded at fair value, which represented a nonrecurring fair value measurement using a Level 3 input. At December 31, 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. 15