NIOCORP DEVELOPMENTS LTD 10-Q

ITEM 1. FINANCIAL STATEMENTS Contents Page Condensed consolidated balance sheets as of March 31, 2024 and June 30, 2023 (unaudited) 2 Condensed consolidated statements of operations and comprehensive loss for the three and nine months ended March 31, 2024 and 2023 (unaudited) 3 Condensed consolidated statements of cash flows for the nine months ended March 31, 2024 and 2023 (unaudited) 4 Condensed consolidated statements of shareholders’ (deficit) equity and redeemable noncontrolling interest for the three and nine months ended March 31, 2024 and 2023 (unaudited) 5 - 6 Notes to condensed consolidated financial statements (unaudited) 7 - 18 1 NioCorp Developments Ltd. Condensed Consolidated Balance Sheets (expressed in thousands of U.S. dollars, except share data) (unaudited) As of Note March 31, 2024 June 30, 2023 ASSETS Current Cash and cash equivalents $ 194 $ 2,341 Prepaid expenses and other 261 1,385 Total current assets 455 3,726 Non-current Deposits 35 35 Investment in equity securities 7 9 Right-of-use assets 195 236 Land and buildings, net 837 839 Mineral properties 16,085 16,085 Total assets $ 17,614 $ 20,930 LIABILITIES Current Accounts payable and accrued liabilities 4 $ 5,127 $ 3,491 Convertible debt, current portion 5 1,707 - Warrant liability, at fair value 7c 2,193 - Options, at fair value 7b 11 - Operating lease liability 9 95 71 Total current liabilities 9,133 3,562 Non-current Convertible debt - 10,561 Warrant liabilities, at fair value 7c 2,216 4,989 Earnout Shares liability, at fair value 6 6,667 10,521 Operating lease liability 120 164 Total liabilities 18,136 29,797 Commitments and contingencies 9 Redeemable noncontrolling interest 7a 1,572 2,100 SHAREHOLDERS’ DEFICIT Common shares, no par value, unlimited shares authorized; 36,252,990 and 31,202,131 shares outstanding, respectively 7 159,854 140,421 Accumulated deficit ( 161,037 ) ( 150,477 ) Accumulated other comprehensive loss ( 911 ) ( 911 ) Total shareholders’ deficit ( 2,094 ) ( 10,967 ) Total liabilities, redeemable noncontrolling interest, and shareholders’ deficit $ 17,614 $ 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 March 31, For the Nine Months Ended March 31, Note 2024 2023 2024 2023 Operating expenses Employee related costs $ 2,531 $ 1,405 $ 3,181 $ 1,989 Professional fees 633 157 2,772 583 Exploration expenditures 8 489 1,410 2,417 4,015 Other operating expenses 1,457 26,220 3,100 26,888 Total operating expenses 5,110 29,192 11,470 33,475 Change in fair value of Earnout Shares liability 6 ( 955 ) ( 881 ) ( 3,854 ) ( 881 ) Change in fair value of warrant liability 7c ( 724 ) 784 ( 580 ) 868 Debt extinguishment - 300 - 1,922 Foreign exchange loss (gain) ( 27 ) 83 ( 10 ) 192 Interest expense 5 1,016 142 4,267 362 Loss on equity securities - 1 2 2 Other gains 7b ( 195 ) - ( 195 ) ( 13 ) Loss before income taxes 4,225 29,621 11,100 35,927 Income tax benefit - ( 186 ) ( 101 ) ( 186 ) Net loss 4,225 29,435 10,999 35,741 Net loss attributable to redeemable noncontrolling interest 169 92 439 92 Net loss attributable to the Company 2d $ 4,056 $ 29,343 $ 10,560 $ 35,649 Other comprehensive loss: Net loss $ 4,225 $ 29,435 $ 10,999 $ 35,741 Other comprehensive loss: Reporting currency translation - ( 112 ) - ( 82 ) Total comprehensive loss 4,225 29,323 10,999 35,659 Comprehensive loss attributable to redeemable noncontrolling interest 169 92 439 92 Comprehensive loss attributable to the Company $ 4,056 $ 29,231 $ 10,560 $ 35,567 Loss per common share, basic and diluted 2d $ 0.11 $ 1.00 $ 0.29 $ 1.26 Weighted average common shares outstanding, basic and diluted 35,160,333 28,546,379 33,421,185 28,128,731 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 Nine Months Ended March 31, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net loss for the period $ ( 10,999 ) $ ( 35,741 ) Adjustments for: Initial valuation of earnout shares liability - 13,195 Change in fair value of earnout shares liability ( 3,854 ) ( 881 ) Initial valuation of warrant liabilities - 3,848 Change in fair value of warrant liabilities ( 580 ) 868 Share-based compensation 2,779 1,788 Accretion of convertible debt 4,267 215 Loss on debt extinguishment - 1,422 Loss on Yorkville equity facility shares issued 78 - Private placement compensation adjustment 102 - Fair value of commitment shares issued - 650 Foreign exchange loss - 200 Other gains ( 195 ) ( 13 ) Depreciation 2 2 Unrealized loss on equity securities 2 2 Non-cash lease activity 21 ( 12 ) Change in working capital items: Prepaid expenses and other 1,124 304 Accounts payable and accrued liabilities 1,637 2,688 Net cash used in operating activities ( 5,616 ) ( 11,465 ) 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 common shares 3,663 11 Share issue costs ( 194 ) ( 21 ) Convertible debt repayment - ( 515 ) Proceeds from debt issuance, net of cost - 14,857 Related party debt draws - 1,130 Related party debt - ( 1,841 ) Net cash provided by financing activities 3,469 13,621 Exchange rate effect on cash and cash equivalents - ( 312 ) Change in cash and cash equivalents during period ( 2,147 ) 1,865 Cash and cash equivalents, beginning of period 2,341 5,280 Cash and cash equivalents, end of period $ 194 $ 7,145 Supplemental cash flow information: Amounts paid for interest $ - $ 239 Amounts paid for income taxes - - Non-cash investing and financing transactions: Conversion of debt for common shares $ 13,121 $ 1,950 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 Shares Accumulated Deficit Accumulated Other Comprehensive Loss Total Redeemable Noncontrolling Interest Balance, December 31, 2022 28,242,064 $ 130,995 $ ( 116,703 ) $ ( 1,023 ) $ 13,269 $ - Exercise of options 4,557 - - - - - Issuance of financing warrants - 3,337 - - 3,337 - Common shares issued in the GXII transaction 1,753,821 - - - - - Redeemable noncontrolling interest - ( 2,325 ) - - ( 2,325 ) 2,325 Commitment shares issued 81,213 650 - - 650 - Share based compensation - 1,788 - - 1,788 - Foreign currency translation adjustments - - - 112 112 - Loss for the period - - ( 29,343 ) - ( 29,343 ) ( 92 ) Balance, March 31, 2023 30,081,655 $ 134,445 $ ( 146,046 ) $ ( 911 ) $ ( 12,512 ) $ 2,233 Balance, December 31, 2023 34,091,844 $ 151,810 $ ( 156,981 ) $ ( 911 ) $ ( 6,082 ) $ 1,830 Yorkville equity facility draws 242,500 622 - - 622 - Debt conversions 1,674,954 4,815 - - 4,815 - Share issuance costs - ( 55 ) - - ( 55 ) - Option liability valuations - ( 206 ) - - ( 206 ) - Exchange of Class B shares 243,692 89 - - 89 ( 89 ) Share-based compensation - 2,779 - - 2,779 - Loss for the period - - ( 4,056 ) - ( 4,056 ) ( 169 ) Balance, March 31, 2024 36,252,990 $ 159,854 $ ( 161,037 ) $ ( 911 ) $ ( 2,094 ) $ 1,572 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 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 Shares 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 265,138 11 - - 11 - Debt conversions 314,423 1,950 - - 1,950 - Issuance of financing warrants - 3,337 - - 3,337 - Common shares issued in the GXII transaction 1,753,821 - - - - - Redeemable noncontrolling interest - ( 2,325 ) - - ( 2,325 ) 2,325 Commitment shares issued 81,213 650 - - 650 - Share based compensation - 1,788 - - 1,788 - Share issuance costs - ( 21 ) - - ( 21 ) - Foreign currency translation adjustments - - - 82 82 - Loss for the period - - ( 35,649 ) - ( 35,649 ) ( 92 ) Balance, March 31, 2023 30,081,655 $ 134,445 $ ( 146,046 ) $ ( 911 ) $ ( 12,512 ) $ 2,233 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 462,500 1,451 - - 1,451 - Debt conversions 3,673,435 13,121 - - 13,121 - Share issuance costs - ( 194 ) - - ( 194 ) - Option liability valuations - ( 206 ) - - ( 206 ) - Exchange of Class B shares 243,692 89 - - 89 ( 89 ) Share-based compensation - 2,779 - - 2,779 - Loss for the period - - ( 10,560 ) - ( 10,560 ) ( 439 ) Balance, March 31, 2024 36,252,990 $ 159,854 $ ( 161,037 ) $ ( 911 ) $ ( 2,094 ) $ 1,572 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements March 31, 2024 (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 PRESENTATION a) Basis of Presentation 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 March 31, 2024, 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 Accounting Standards Update (“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 7 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements March 31, 2024 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) SEC’s Release No. 33-10532, 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 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. In March 2024, the SEC issued final rules on the enhancement and standardization of climate-related disclosures. The rules require disclosure of, among other things: material climate-related risks; activities to mitigate or adapt to such risks; governance and management of such risks; and material greenhouse gas emissions from operations owned or controlled (Scope 1) and/or indirect emissions from purchased energy consumed in operations (Scope 2). Additionally, the rules require disclosure in the notes to the financial statements of the effects of severe weather events and other natural conditions, subject to certain materiality thresholds. As a smaller reporting company, the rules will become effective on a phased-in timeline starting in fiscal years beginning in calendar year 2027, which for us is fiscal 2028. On April 4, 2024, the SEC issued an order staying the rules during the pendency of the various challenges to the rules’ validity. We are in the process of analyzing the impact of the rules on our 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. 8 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements March 31, 2024 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) 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: For the Three Months Ended March 31, For the Nine Months Ended March 31, 2024 2023 2024 2023 Net loss $ 4,225 $ 29,435 $ 10,999 $ 35,741 Adjust: Net loss attributable to noncontrolling interest (167 ) (56 ) (520 ) (43 ) Net loss available to participating securities 4,058 29,379 10,479 35,698 Net loss attributable to vested shares of ECRC Class B common stock ( 184 ) ( 708 ) ( 825 ) ( 271 ) Net loss attributed to common shareholders - basic and diluted $ 3,874 $ 28,671 $ 9,654 $ 35,427 Denominator: Weighted average shares outstanding – basic and diluted 35,160,333 28,546,379 33,421,185 28,128,731 Loss per Common Share outstanding – basic and diluted $ 0.11 $ 1.00 $ 0.29 $ 1.26 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 nine-month periods indicated below. Schedule of excluded from the dilutive securities For the Three and Nine Months Ended March 31, Excluded potentially dilutive securities (1)(2) : 2024 2023 Options 2,563,000 1,561,500 Warrants 18,585,105 19,257,515 Convertible debt 714,900 2,723,500 Total potential dilutive securities 21,863,005 23,542,515 (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 $ 10,999 for the nine months ended March 31, 2024 (2023 - $ 35,741 ) and had a working capital deficit of $ 8,678 and an accumulated deficit of $ 161,037 as of March 31, 2024. As a development stage issuer, the Company has not yet commenced its mining operations and accordingly does not generate any revenue. As of March 31, 2024, the Company had cash of $ 194 , 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. 9 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements March 31, 2024 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) In response to these conditions and events, the Company plans to obtain additional financing. As disclosed in Note 11, on April 12, 2024, the Company closed a private placement which resulted in the receipt of net proceeds of $ 6,935 , after giving effect to certain fees but before estimated offering expenses. In addition, subject to the conditions discussed in Note 11, NioCorp expects to have access to up to $61,189 in net proceeds from the Standby Equity Purchase Agreement, dated January 26, 2023 (the “Yorkville Equity Facility Financing Agreement”), between 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 March 31, 2024. 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 March 31, 2024 June 30, 2023 Accounts payable, trade $ 4,788 $ 1,990 Trade payable accruals 263 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 $ 5,127 $ 3,491 5. 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 4,267 Principal and accrued interest converted ( 13,121 ) Balance, March 31, 2024 $ 1,707 Add: Unamortized debt issuance costs 43 Remaining principal balance, March 31, 2024 $ 1,750 Based on the Company’s closing Common Share price of $ 2.72 as of March 31, 2024, conversion of the remaining Convertible Debenture balance, including accrued interest, would require the issuance of approximately 714,900 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 27,300 shares. 10 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements March 31, 2024 (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”), include rights under which the holders may exchange such shares into Common Shares, and certain of such shares are subject to certain vesting conditions (the “Earnout Shares”). These Earnout Shares were valued utilizing a Monte Carlo Simulation pricing model with the following primary inputs: Key Valuation Input March 31, 2024 June 30, 2023 Closing Common Share price $ 2.72 $ 5.03 Term (expiry) March 17, 2033 March 17, 2033 Volatility 61.0 % 33.5 % Risk-free rate 4.20 % 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 nine-month periods ended March 31, 2024: For the Three Months Ended March 31, 2024 For the Nine Months Ended March 31, 2024 Fair value at beginning of period $ 7,622 $ 10,521 Change in fair value ( 955 ) ( 3,854 ) Fair value at March 31, 2024 $ 6,667 $ 6,667 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 Elk Creek 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 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 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 11 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements March 31, 2024 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) 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 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 %. In connection with the closing of the previously disclosed business combination transaction (the “Transaction”) on March 17, 2023 (the “Transaction Closing”), 4,565,808 shares of Class B common stock of ECRC were vested as of the Transaction Closing (the “Vested Shares”) and are exchangeable for Common Shares on a one-for-one basis at any time, and from time to time, until the tenth anniversary of the Transaction Closing. On February 29, 2024, 243,692 Vested Shares were exchanged for an equivalent number of Common Shares. This exchange resulted in a change in the Company’s ownership interest in ECRC and was accounted for as an equity transaction in accordance with ASC 810-10-45-23, with no gain or loss recognized. Accordingly, the carrying amount of the noncontrolling interest was adjusted to reflect the change in the Company’s ownership interest with a corresponding offset booked to equity. The Company issued the following Common Shares under the Yorkville Equity Facility Financing Agreement during the nine months ended March 31, 2024: 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 February 28, 2024 75,000 170 174 4 March 7, 2024 82,500 210 218 8 March 14, 2024 85,000 226 230 4 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 option Number of Options Weighted Average Exercise Price Balance, June 30, 2023 1,541,500 $ 7.19 Granted 1,625,000 2.99 Exercised ( 7,800 ) 3.95 Expired/forfeited ( 595,700 ) 5.45 Balance, March 31, 2024 2,563,000 $ 4.88 12 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements March 31, 2024 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) The following table summarizes information about Options outstanding at March 31, 2024: 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 - $ 6.95 March 27, 2026 538,000 - 538,000 - $ 2.99 February 15, 2029 1,625,000 - 1,625,000 - 2,563,000 $ - 2,563,000 $ - The aggregate intrinsic value in the preceding table represents the total intrinsic value, based on the Company’s closing share price of $2.72 as of March 31, 2024, which would have been received by the option holders had all option holders exercised their Options as of that date. On February 15, 2024, the Company granted 1,625,000 Options at a fair value price of $2.99 per Option, based on a Black-Scholes model with an average risk-free rate of 4.25%, average share price volatility of 63.2%, and a five-year expected option life. Prior to January 1, 2024, the Company concluded that under ASU 718, Compensation – Stock Compensation (Topic 718) , Options previously issued on December 31, 2021, May 30, 2022, and March 27, 2023, which included a C$ strike price should remain equity-classified as management determined that the Options qualified for an exemption from liability classification as the Options were denominated in a currency in which a substantial portion of the Company’s equity securities traded. Effective January 1, 2024, the Company determined that due to historically decreasing trading volume on the Toronto Stock Exchange (the “TSX”), this exemption no longer applied and accordingly, these Options were classified as a liability based on their fair values on that date. The Company recorded a mark-to-market gain of $195 in other operating expenses related to these option liabilities for the three-month period ended March 31, 2024. On March 28, 2024, the Company’s Board of Directors (the “Board”) approved a modification to Options previously issued on March 27, 2023, with dual strike prices of $6.95 and C$9.52, under which the option to exercise in C$ was removed. No other terms or conditions were amended by the Board. Based on this amendment, the Company re-classified these Options to equity on March 28, 2024, based on their fair value on that date. 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 - - Expired ( 894,631 ) 8.94 Balance, March 31, 2024 18,585,105 $ 10.82 13 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements March 31, 2024 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) At March 31, 2024, the Company had outstanding exercisable Warrants, as follows: Number Exercise Price Expiry Date 504,611 C$ 11.00 June 30, 2024 894,636 $ 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 18,585,105 (1) These Warrants expire in equal monthly tranches from April 17, 2024 through September 17, 2024 Private Warrants In connection with the Transaction 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 Transaction 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 of their permitted transferees are treated as Public Warrants. 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 pricing model: Key Valuation Input March 31, 2024 June 30, 2023 Share price on valuation date $ 2.72 $ 5.03 Strike price $ 11.50 $ 11.50 Implied volatility of Public Warrants 57.2 % 33.5 % Risk free rate 4.31 % 4.18 % Dividend yield 0 % 0 % Expected warrant life in years 3.97 4.73 14 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements March 31, 2024 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) The change in the Private Warrants liability is presented below: For the Three Months Ended March 31, 2024 For the Nine Months Ended March 31, 2024 Fair value at beginning of period $ 3,040 $ 3,279 Change in fair value ( 824 ) ( 1,063 ) Fair value at March 31, 2024 $ 2,216 $ 2,216 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 U.S. dollar exchange rate as reported by Bloomberg, L.P.) 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 March 31, 2024 June 30, 2023 Share price on valuation date $ 2.72 $ 5.03 Volatility 64.0 % 63.0 % Risk free rate 4.26 % 4.11 % Probability of issuance 99.4 % 80.8 % The change in the fair value of the Contingent Consent Warrants is presented below: For the Three Months Ended March 31, 2024 For the Nine Months Ended March 31, 2024 Fair value at beginning of period $ 2,093 $ 1,710 Change in fair value 100 483 Fair value at March 31, 2024 $ 2,193 $ 2,193 15 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements March 31, 2024 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) 8. EXPLORATION EXPENDITURES Schedule of exploration expenditures For the Three Months Ended March 31, For the Nine Months Ended March 31, 2024 2023 2024 2023 Technical studies and engineering $ 53 $ 85 $ 350 $ 222 Field management and other 136 195 418 588 Metallurgical development 300 1,130 1,630 3,203 Geologists and field staff - - 19 2 Total $ 489 $ 1,410 $ 2,417 $ 4,015 9. LEASES The Company incurred lease costs as follows: For the Three Months Ended March 31, For the Nine Months Ended March 31, 2024 2023 2024 2023 Operating Lease Cost: Fixed rent expense $ 23 $ 15 $ 68 $ 60 Variable rent expense 3 3 10 9 Short-term lease cost 2 3 7 7 Sublease income ( 7 ) ( 6 ) ( 23 ) ( 24 ) Net lease cost – other operating expense $ 21 $ 15 $ 62 $ 52 The maturities of lease liabilities are as follows at March 31, 2024: Future Lease Maturities Total remaining lease payments $ 268 Less portion of payments representing interest ( 53 ) Present value of lease payments 215 Less current portion of lease payments 95 Non-current lease liability $ 120 10. FAIR VALUE MEASUREMENTS The following tables present information about the assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2024, 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. 16 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements March 31, 2024 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) Schedule of fair values determined by level 3 inputs are unobservable data As of March 31, 2024 Note Total Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 194 $ 194 $ - $ - Investment in equity securities 7 7 - - Total $ 201 $ 201 $ - $ - Liabilities: Earnout Shares liability 6 $ 6,667 $ - $ - $ 6,667 Warrant liabilities 7c 4,409 - 2,216 2,193 Total $ 11,076 $ - $ 2,216 $ 8,860 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 March 31, 2024, 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. 11. SUBSEQUENT EVENT On April 12, 2024, the Company issued and sold to Yorkville and Lind Global Fund II LP (together with Yorkville, the “April 2024 Purchasers”), in a private placement (the “April 2024 Private Placement”), $8,000 aggregate principal amount of unsecured notes (the “April 2024 Notes”), pursuant to a securities purchase agreement, dated April 11, 2024 (the “April 2024 Purchase Agreement”), between the Company and each of the April 2024 Purchasers. Pursuant to the terms of the April 2024 Notes, subject to certain exceptions, on the first day of each calendar month, beginning on June 1, 2024 (excluding August 2024) (the “Payment Date”), the Company will be required to repay a portion of the outstanding balance of all of the April 2024 Notes, on a pro-rata basis, in an amount equal to the sum of (i) $1,400 of principal (or the outstanding principal if less than such amount) in the aggregate among all of the outstanding Notes, plus (ii) 8.0% of the principal amount being paid (the “Payment Premium”), and (iii) accrued and unpaid interest, if any, as of the Payment Date. The Company is required to make payments on each Payment Date until the entire outstanding principal is repaid but will not have an obligation to make a payment on a Payment Date if certain equity conditions (the “Equity Conditions”) are satisfied. The Company also issued to the April 2024 Purchasers, in proportion to the aggregate principal amount of April 2024 Notes issued to each April 2024 Purchaser, Warrants (the “April 2024 Warrants”) to purchase up to 615,385 Common Shares (the “April 2024 Warrants Shares”), which are equal to 25 % of the aggregate principal amount of April 2024 Notes issued to the April 2024 Purchasers divided by the exercise price of $ 3.25 , subject to any adjustment to give effect to any stock dividend, stock split or recapitalization. 17 NioCorp Developments Ltd. Notes to the Condensed Consolidated Financial Statements March 31, 2024 (expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited) Pursuant to the April 2024 Purchase Agreement, the April 2024 Purchasers advanced an aggregate of $ 6,935 to the Company in consideration of the issuance by the Company to the April 2024 Purchasers of $ 8,000 aggregate principal amount of the April 2024 Notes and April 2024 Warrants. Proceeds from the April 2024 Private Placement will be used for general working capital purposes, including for accounts payable, other payables and operating expenses, and to satisfy the fees and expenses incurred in connection with the Private Placement. Subject to certain limitations contained within the April 2024 Notes, holders of the April 2024 Notes will be entitled to convert the principal amount of, accrued and unpaid interest, if any, and any Payment Premium that has become due and payable on each April 2024 Note, from time to time over their term, into a number of Common Shares equal to the quotient of the amount being converted divided by a fixed conversion price of $ 2.75 per Common Share up to a maximum of 3,141,817 Common Shares (together with the April 2024 Warrant Shares, the “April 2024 Underlying Shares”). As noted above, the Company is required to make payments on each Payment Date until the entire outstanding principal is repaid, but will not have an obligation to make a payment on a Payment Date if the Equity Conditions are satisfied. The Equity Conditions means (i) on each of the five consecutive trading days prior a Payment Date (the “Measuring Period”) the Underlying Shares Registration Statement (as defined below) is effective and available for the resale by the Purchasers of all Underlying Shares, (ii) the Company has no knowledge of any fact that would cause the Underlying Shares Registration Statement not to be effective and available for the resale of the Underlying Shares, (iii) on each day during the Measuring Period, the Common Shares are designated for quotation on Nasdaq, or on such other market or exchange on which the Common Shares are then listed or traded to the extent such other market or exchange is the principal U.S. trading market for the Common Shares (the “Principal U.S. Market”), and have not been suspended from trading nor have delisting or suspension of trading been threatened or pending, (iv) during the Measuring Period, an event of default has not occurred, (v) on each trading day during the Measuring Period, the daily U.S. dollar volume-weighted average price (“VWAP”) for a Common Share on the Principal U.S. Market as reported by Bloomberg Financial Markets is greater than 120% of the Conversion Price, (vi) on each trading day during the Measuring Period the average daily volume traded exceeded $500, and (vii) there is no limitation on conversion under the terms of Notes. The April 2024 Notes are the unsecured obligations of the Company and will mature on December 31, 2024. The April 2024 Notes will incur a simple interest rate obligation of 0.0% per annum (which will increase to 18.0% per annum upon the occurrence of an event of default). The outstanding principal amount of, accrued and unpaid interest, if any, on, and the Payment Premium, if any, on the April 2024 Notes must be paid by NioCorp in cash when the same becomes due and payable under the terms of the April 2024 Notes at their stated maturity, upon their redemption or otherwise. The April 2024 Notes may also be redeemed at the Company’s option at any time and from time to time over their term at a redemption price equal to the principal amount being redeemed, plus the Payment Premium, plus accrued and unpaid interest, if any, as of the redemption date. The Company and the Purchasers also entered into a registration rights agreement (the “April 2024 Registration Rights Agreement”) pursuant to which the Company has agreed to file with the SEC a registration statement (the “April 2024 Underlying Shares Registration Statement”) registering the resale by the Purchasers of the April 2024 Underlying Shares under the Securities Act of 1933 (the “Securities Act”), as soon as practicable but no later than May 15, 2024, and to use its reasonable best efforts to have the April 2024 Underlying Shares Registration Statement declared effective as soon as practicable after the filing thereof, but in no event later than the 60th calendar day following the filing date thereof. The Company further agreed to use its reasonable best efforts to cause the April 2024 Underlying Shares Registration Statement to remain continuously effective for a period that will terminate upon the first date on which all of the April 2024 Underlying Shares may be sold without restriction, including volume and manner-of-sale restrictions, pursuant to Rule 144 under the Securities Act or have been sold by April 2024 Purchasers. The Company also granted to the Purchasers certain demand rights for underwritten shelf takedowns and piggyback registration rights with respect to the April 2024 Underlying Shares. 18