Item 1. Financial Statements
ITEM 1. FINANCIAL STATEMENTS
Contents
Page
Condensed consolidated balance sheets as of September 30, 2024 and June 30, 2024 (unaudited)
2
Condensed consolidated statements of operations and comprehensive loss for the three months ended September 30, 2024 and 2023 (unaudited)
3
Condensed consolidated statements of cash flows for the three months ended September 30, 2024 and 2023 (unaudited)
4
Condensed consolidated statements of shareholders’ (deficit) equity and redeemable noncontrolling interest for the three months ended September 30, 2024 and 2023 (unaudited)
5
Notes to condensed consolidated financial statements (unaudited)
6 - 14
1
NioCorp
Developments Ltd.
Condensed
Consolidated Balance Sheets
(expressed
in thousands of U.S. dollars, except share data) (unaudited)
As of
September 30,
2024
June 30,
2024
ASSETS
Current
Cash and cash equivalents
$ 150
$ 2,012
Deferred share issuance costs
459
-
Prepaid expenses and other
587
916
Total current assets
1,196
2,928
Non-current
Deposits
35
35
Investment in equity securities
4
4
Right-of-use assets
167
181
Land and buildings, net
836
837
Mineral properties
16,085
16,085
Total assets
$ 18,323
$ 20,070
LIABILITIES
Current
Accounts payable and accrued liabilities
$ 2,736
$ 1,843
Warrant liabilities, at fair value
-
2,365
Convertible debt
5,258
7,660
Related party debt
33
-
Operating lease liability
97
96
Total current liabilities
8,124
11,964
Non-current
Warrant liabilities, at fair value
1,595
1,651
Earnout liability, at fair value
4,633
3,817
Operating lease liability
87
104
Total liabilities
14,439
17,536
Commitments and contingencies
-
Redeemable noncontrolling interest
1,503
1,534
SHAREHOLDERS’ EQUITY
Common stock, no par value, unlimited shares authorized; 38,720,244 and 38,062,647 shares outstanding, respectively
167,275
163,823
Accumulated deficit
( 163,983 )
( 161,912 )
Accumulated other comprehensive loss
( 911 )
( 911 )
Total shareholders’ equity
2,381
1,000
Total liabilities, redeemable noncontrolling interest, and shareholders’ equity
$ 18,323
$ 20,070
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 September 30,
2024
2023
Operating expenses
Employee related costs
$ 330
$ 322
Professional fees
450
1,187
Exploration expenditures
138
1,100
Other operating expenses
477
834
Total operating expenses
1,395
3,443
Change in fair value of earnout shares liability
816
( 2,093 )
Change in fair value of warrant liabilities
( 56 )
73
Change in fair value of convertible notes
17
-
Interest expense
44
2,075
Foreign exchange loss (gain)
8
( 11 )
Other gains
( 122 )
-
Loss on equity securities
-
1
Loss before income taxes
( 2,102 )
( 3,488 )
Income tax benefit
-
( 101 )
Net loss and comprehensive loss
( 2,102 )
( 3,387 )
Less: Net loss attributable to redeemable noncontrolling interest
( 31 )
( 174 )
Net loss and comprehensive loss attributable to the Company
$ ( 2,071 )
$ ( 3,213 )
Loss per common share, basic and diluted
$ ( 0.05 )
$ ( 0.09 )
Weighted average common shares outstanding, basic and diluted
38,361,344
31,967,091
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 three months
ended September 30,
2024
2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period
$ ( 2,102 )
$ ( 3,387 )
Adjustments for:
Change in valuation of earnout shares liability
816
( 2,093 )
Change in valuation of warrant liabilities
( 56 )
73
Change in fair value of convertible note
17
-
Accretion of convertible debt
44
2,075
Other gain
( 122 )
-
Yorkville share issuances
( 1 )
53
Depreciation
1
1
Unrealized loss on equity securities
-
1
Non-cash lease activity
( 1 )
( 1 )
( 1,404 )
( 3,278 )
Change in working capital items:
Prepaid expenses
( 130 )
417
Accounts payable and accrued liabilities
892
124
Net cash used in operating activities
( 642 )
( 2,737 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of capital stock
692
1,532
Related party debt draws
33
-
Debt repayments
( 1,943 )
-
Share issue costs
( 2 )
( 38 )
Net cash (used in) provided by financing activities
( 1,220 )
1,494
Change in cash and cash equivalents during period
( 1,862 )
( 1,243 )
Cash and cash equivalents, beginning of period
2,012
2,341
Cash and cash equivalents, end of period
$ 150
$ 1,098
Supplemental cash flow information:
Conversion of debt for common shares
$ 501
$ 5,729
Value of warrants issued
2,262
-
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 data) (unaudited)
Common Shares Outstanding
Common
Stock
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Redeemable Noncontrolling Interest
Balance, June 30, 2023
31,202,131
$ 140,421
$ ( 150,477 )
$ ( 911 )
$ ( 10,967 )
$ 2,100
Private placements
250,000
1,000
-
-
1,000
-
Yorkville equity facility draws
145,000
585
-
-
585
-
Debt conversions
1,316,288
5,729
-
-
5,729
-
Share issuance costs
-
( 38 )
-
-
( 38 )
-
Loss for the period
-
-
( 3,213 )
-
( 3,213 )
( 174 )
Balance, September 30, 2023
32,913,419
$ 147,697
$ ( 153,690 )
$ ( 911 )
$ ( 6,904 )
$ 1,926
Balance, June 30, 2024
38,062,647
$ 163,823
$ ( 161,912 )
$ ( 911 )
$ 1,000
$ 1,534
Yorkville equity facility draws
399,250
691
-
-
691
-
Debt conversions
258,347
501
-
-
501
-
Issuance of warrants
-
2,262
-
-
2,262
-
Share issuance costs
-
( 2 )
-
-
( 2 )
-
Loss for the period
-
-
( 2,071 )
-
( 2,071 )
( 31 )
Balance, September 30, 2024
38,720,244
$ 167,275
$ ( 163,983 )
$ ( 911 )
$ 2,381
$ 1,503
The
accompanying notes are an integral part of these condensed consolidated financial statements.
5
NioCorp
Developments Ltd.
Notes
to the Condensed Consolidated Financial Statements
September
30, 2024
(expressed
in thousands of U.S. dollars, except share and per share data 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 Company’s
niobium, scandium, and titanium project (the “Elk Creek Project”) located in southeastern Nebraska.
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, 2024. 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 September 30, 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, 2024. The interim results are not necessarily indicative of results
for the full year ending June 30, 2025, or future operating periods.
b)
Recent
Accounting Standards
Issued
and Not Effective
From
time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“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
6
NioCorp
Developments Ltd.
Notes
to the Condensed Consolidated Financial Statements
September
30, 2024
(expressed
in thousands of U.S. dollars, except share and per share data or as otherwise stated) (unaudited)
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 April 2024 Notes, 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.
The Company acquired a federal income tax payable of $ 443 in connection with the GXII Transaction (as defined below). As a result of post-transaction losses at Elk Creek Resources Corp. (“ECRC”), a partial release of the valuation allowance attributed to the reduction of the acquired federal income tax payable of $ 101 was recorded as an income tax benefit in the condensed consolidated statement of operations and comprehensive loss for the three months ended September 30, 2023. The Company maintains a full valuation allowance against future income tax assets as it is more likely than not that all of the assets will not be realized.
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 September 30,
2024
2023
Net loss
$ ( 2,102 )
$ ( 3,387 )
Less: Net loss attributable to noncontrolling interest
( 31 )
( 174 )
Net loss available to participating securities
( 2,071 )
( 3,213 )
Less: Net loss attributable to vested shares of ECRC Class B common stock
( 186 )
( 257 )
Net loss attributed to common shareholders - basic and diluted
$ ( 1,885 )
$ ( 2,956 )
Denominator:
Weighted average shares outstanding – basic and diluted
38,361,344
31,967,091
Loss per Common Share outstanding – basic and diluted
$ ( 0.05 )
$ ( 0.09 )
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-month
periods indicated below.
Schedule of excluded from the dilutive securities
For the Three Months
Ended September 30,
Excluded potentially dilutive securities (1)(2) :
2024
2023
Options
2,455,500
1,319,000
Warrants
20,932,985
19,066,304
Convertible debt
1,920,000
2,448,730
Total potential dilutive securities
25,308,485
22,834,034
(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 $ 2,071 for the three months ended September 30, 2024
(2023 - $ 3,213 ) and had a working capital deficit of $ 6,928 and an accumulated deficit
of $ 163,983 as of September 30, 2024. As a development stage issuer, the Company
has not yet commenced its mining operations and accordingly does not generate any revenue. As of September 30, 2024, the Company
had cash of $ 150 , which will not be sufficient to
7
NioCorp
Developments Ltd.
Notes
to the Condensed Consolidated Financial Statements
September
30, 2024
(expressed
in thousands of U.S. dollars, except share and per share data or as otherwise stated) (unaudited)
fund normal operations or the repayment of the April 2024 Notes (as further
discussed in Note 5b) 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. As disclosed in Note 12, in November 2024 the Company closed an underwritten
public offering (the “November 2024 Registered Offering”) and a non-brokered private placement (the “November
2024 Private Offering”, and together with the November 2024 Registered Offering, the “November Offerings”) which
resulted in the receipt of net proceeds of $ 6,000 , after giving effect to certain fees but before estimated underwriting discounts and offering
expenses. In addition, NioCorp expects to have access to up to $58,577 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. 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 funds received from the November Offerings, and 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 September 30, 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
September 30,
2024
June 30,
2024
Accounts payable, trade
$ 2,056
$ 1,417
Trade payable accruals
603
350
Environmental accruals
48
48
Loan origination fees payable to related party
29
28
Total accounts payable and accrued liabilities
$ 2,736
$ 1,843
5.
DEBT
a)
Yorkville
Convertible Debenture
On
July 19, 2024, the Company and Yorkville entered into a make-whole payment agreement under which Yorkville agreed to convert the remaining
outstanding principal and accrued interest of $ 554 under the unsecured convertible debentures (the “Convertible Debentures”)
issued to Yorkville pursuant to the Securities Purchase Agreement, dated January 26, 2023 (the “Yorkville Convertible Debt Financing
Agreement”), into Common Shares in exchange for a $ 95 make-whole payment. The Company recorded a gain on extinguishment of $ 19
as part other gains in the condensed consolidated statements of operations and comprehensive loss.
8
NioCorp
Developments Ltd.
Notes
to the Condensed Consolidated Financial Statements
September
30, 2024
(expressed
in thousands of U.S. dollars, except share and per share data or as otherwise stated) (unaudited)
The
change in the Convertible Debentures is presented below:
For the Three Months Ended September 30, 2024
Balance at June 30, 2024
$ 571
Accretion expense
43
Principal and interest converted
( 614 )
Balance, September 30, 2024
$ -
The
following table discloses the components of interest expense associated with the Convertible Debentures.
For the Three Months
Ended September 30,
Component of Interest Expense
2024
2023
Contractual interest
$ 1
$ 130
Amortization of discount and issuance costs
43
1,945
Total
$ 44
$ 2,075
b)
April
2024 Notes
On
April 12, 2024, the Company issued and sold to Yorkville and Lind Global Fund II LP (“Lind II”, and together with
Yorkville, the “April 2024 Purchasers”) $ 8.0 million 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. 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, 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.
The
change in the April 2024 Notes is presented below:
For
the Three Months Ended September 30, 2024
Fair value at June 30, 2024
$ 7,089
Principal payments
( 1,848 )
Change in fair value
17
Balance, September 30, 2024
$ 5,258
Remaining Principal Balance, September 30, 2024
$ 5,280
The
change in the April 2024 Warrant liability is presented below:
For
the Three Months Ended September 30, 2024
Fair value at June 30, 2024
$ 298
Change in fair value
149
Balance, September 30, 2024
$ 447
On
September 4, 2024, NioCorp entered into (i) a consent and waiver (the “September Yorkville Consent”) to the April
2024 Notes issued and sold to Yorkville pursuant to the April 2024 Purchase Agreement and (ii) a consent and waiver (together
with the Yorkville Consent, the “September Consents”) to the April 2024 Notes issued and sold to Lind II pursuant
to the April 2024 Purchase Agreement. The September Consents, among other things, reduced the amounts due to the April 2024 Purchasers
on September 1, 2024 by an aggregate of $ 1,176 to an aggregate of $ 336 , increased the amounts due to the April 2024 Purchasers
on December 1, 2024 by an aggregate of $ 1,176 , and prospectively waived any term of the April 2024 Notes that would otherwise
be triggered upon a failure of the Company to pay to the April 2024 Purchasers the remainder of the amount due on September 1,
2024. Except as modified by the September Consents and the October Consents (as defined below), as discussed in Note 12, the terms
of the April 2024 Notes as previously disclosed are unchanged.
9
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
September 30, 2024
(expressed in thousands
of U.S. dollars, except share and per share data or as otherwise stated) (unaudited)
6.
CLASS
B COMMON STOCK OF ECRC
The
shares of Class B common stock of 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
September 30,
2024
June 30,
2024
Closing Common Share price
$ 2.18
$ 1.73
Term (expiry)
March 17, 2033
March 17, 2033
Implied volatility of Public Warrants
60 %
65.0 %
Risk-free rate
3.74 %
4.35 %
The
following table sets forth a summary of the changes in the fair value of the Earnout Shares liability for the three-month period
ended September 30, 2024:
For the Three Months Ended September 30, 2024
Fair value at June 30, 2024
$ 3,817
Change in fair value
816
Fair value at September 30, 2024
$ 4,633
7. COMMON
SHARES
a) Issuance
The
Company issued the following Common Shares under the Yorkville Equity Facility Financing Agreement during the three months ended
September 30, 2024:
Date
Common Shares Issued
Gross Funds Received
Market Value of Shares Issued
(Gain)/Loss
on Issuance
August 28, 2024
75,000
$ 140
$ 133
$ ( 7 )
September 3, 2024
71,000
124
123
( 1 )
September 6, 2024
71,500
118
118
-
September 16, 2024
72,000
124
124
-
September 19, 2024
49,750
85
85
-
September 25, 2024
60,000
101
108
7
(Gain)/loss on issuance
represents a non-cash amount equal to the difference between the proceeds received and the fair value of the Common Shares issued
based on the Nasdaq Stock Market LLC (the “Nasdaq”) closing price per Common Share on the issuance date and is recorded
in other operating expenses in the condensed consolidated statement of operations and comprehensive loss.
10
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
September 30, 2024
(expressed in thousands
of U.S. dollars, except share and per share data or as otherwise stated) (unaudited)
b) Stock
Options
Schedule of stock option
Number of Options
Weighted Average
Exercise Price
Aggregate
Intrinsic Value
Weighted
Average Remaining Life
Balance, June 30, 2024
2,495,500
$ 4.78
Granted
-
-
Exercised
-
-
Cancelled/expired
( 40,000 )
6.95
Balance, September 30, 2024
2,455,500
$ 4.76
$ -
3.22 Years
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.
Schedule
of warrant transactions
Number of Warrants
Weighted Average Exercise Price
Balance, June 30, 2024
18,563,561
$ 10.53
Granted
2,816,742
2.31
Exercised
-
-
Expired
( 447,318 )
8.94
Balance, September 30, 2024
20,932,985
$ 9.46
At
September 30, 2024, the Company had outstanding exercisable Warrants, as follows:
Number
Exercise Price
Expiry Date
855,800
C$ 9.70
February 19, 2025
250,000
$ 4.60
September 1, 2025
413,432
$ 3.54
December 22, 2025
315,000
$ 2.20
June 24, 2026
615,385
$ 3.25
April 12, 2027
15,666,626
$ 11.50
March 17, 2028
2,816,742
$ 2.31
September 17, 2028
20,932,985
Private
Warrants
On
March 17, 2023, the Company closed a series of transactions (the “GXII Transaction”) pursuant to the Business Combination
Agreement, dated as of September 25, 2022, by and among the Company, GXII, and Big Red Merger Sub Ltd. In connection with the
closing of the GXII Transaction (the “Closing”), the Company assumed GXII’s obligations under the agreement
governing the GXII share purchase warrants (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”).
11
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
September 30, 2024
(expressed in thousands
of U.S. dollars, except share and per share data or as otherwise stated) (unaudited)
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
September 30,
2024
June 30,
2024
Closing Common Share price
$ 2.18
$ 1.73
Strike price
$ 11.50
$ 11.50
Implied volatility of Public Warrants
60 %
69.0 %
Risk free rate
3.58 %
4.45 %
Dividend yield
0 %
0 %
Expected warrant life in years
3.5
3.7
The
change in the Private Warrants liability is presented below:
For the Three Months Ended September 30, 2024
Fair value at June 30, 2024
$ 1,353
Change in fair value
( 205 )
Fair value at September 30, 2024
$ 1,148
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 III”), Lind III
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 Toronto Stock Exchange 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 III that are exercised, if any, prior to the issuance of any Contingent Consent Warrants.
On
September 17, 2024, the Company’s Common Share price was below the threshold price set forth in the Lind Consent, and accordingly,
the Company issued 2,816,742 Contingent Consent Warrants to Lind III. Each Contingent Consent Warrant is exercisable for one Common Share
at an exercise price of $ 2.308 and may be exercised at any time prior to their expiration on September 17, 2028. The number of Contingent
Consent Warrants issued was based on $ 5,000 divided by the five-day volume weighted average price of the Common Shares on September 16,
2024. The Company valued the Contingent Consent Warrants at $2,262 based on a Black Scholes valuation with the following inputs:
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NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
September 30, 2024
(expressed in thousands
of U.S. dollars, except share and per share data or as otherwise stated) (unaudited)
The Company valued the Contingent Consent Warrants at $2,262 based on a Black Scholes valuation with the following inputs:
Key Valuation Input
September 17,
2024
Closing Common Share price
$ 1.74
Term (years)
4.0
Historic equity volatility
67.14 %
Risk-free rate
3.44 %
The
Company recognized a gain of $103 on the issuance of the Contingent Consent Warrants. This gain was recorded as a part of other
gains in the condensed consolidated statements of operations and comprehensive loss.
8. RELATED PARTY TRANSACTIONS
On September 11, 2024, the
Company and Mark Smith, Chief Executive Officer, President and Executive Chairman of NioCorp, entered into a loan agreement (the
“Smith Loan Agreement”), which provides for a $ 2,000 non-revolving, multi-draw credit facility (the “Smith Loan”). The Smith Loan has an interest rate of 10 % per annum, calculated monthly in arrears, through the date of repayment of the Smith Loan. The Company can pre-pay
the Smith Loan at any time without notice and without penalty, but any amount of principal or interest repaid by the Company prior
to the earlier of the date of expiration of the Smith Loan Agreement on June 30, 2025 and the occurrence of an event of default
under the Smith Loan Agreement will be subject to an early payment fee of 2.5 % of the value of any such payment. The Smith Loan is secured by all of the Company’s assets pursuant to a general security agreement between the Company and Mr. Smith dated September 11, 2024.
As of September 30, 2024, the principal amount outstanding under the Smith Loan was $ 33 and accounts payable and accrued liabilities as of September 30, 2024, included $ 29 of loan origination fees payable to Mr. Smith. Additional drawdowns totaling $ 471 were received subsequent to September 30, 2024. On November 6, 2024, the Company repaid $ 250 of the interest and principal outstanding under the Smith Loan, and $ 28 related to the loan origination fees payable.
9.
EXPLORATION EXPENDITURES
Schedule of exploration expenditures
For the Three Months Ended September 30,
2024
2023
Technical studies and engineering
$ -
$ 200
Field management and other
91
135
Metallurgical development
47
746
Geologists and field staff
-
19
Total
$ 138
$ 1,100
10. LEASES
The
Company incurred lease costs as follows:
For the Three Months Ended September 30,
2024
2023
Operating Lease Cost:
Fixed rent expense
$ 23
$ 23
Variable rent expense
3
3
Short-term lease cost
3
2
Sublease income
( 9 )
( 6 )
Net lease cost – other operating expense
$ 20
$ 22
The
maturities of lease liabilities are as follows at September 30, 2024:
Future Lease Maturities
Total remaining lease payments
$ 220
Less portion of payments representing interest
( 36 )
Present value of lease payments
184
Less current portion of lease payments
( 97 )
Non-current lease liability
$ 87
11. 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 September 30, 2024, and June 30, 2024, 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
13
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
September 30, 2024
(expressed in thousands
of U.S. dollars, except share and per share data or as otherwise stated) (unaudited)
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 September 30, 2024
Total
Level 1
Level 2
Level 3
Assets:
Cash and cash equivalents
$ 150
$ 150
$ -
$ -
Investment in equity securities
4
4
-
-
Total
$ 154
$ 154
$ -
$ -
Liabilities:
April 2024 notes
$ 5,258
$ -
$ -
$ 5,258
Earnout Shares liability
4,633
-
-
4,633
Warrant liabilities
1,595
-
1,595
-
Total
$ 11,486
$ -
$ 1,595
$ 9,891
As of June 30, 2024
Total
Level 1
Level 2
Level 3
Assets:
Cash and cash equivalents
$ 2,012
$ 2,012
$ -
$ -
Investment in equity securities
4
4
-
-
Total
$ 2,016
$ 2,016
$ -
$ -
Liabilities:
April 2024 notes
$ 7,089
$ -
$ -
$ 7,089
Earnout Shares liability
3,817
-
-
3,817
Warrant liabilities
4,016
-
1,651
2,365
Total
$ 14,922
$ -
$ 1,651
$ 13,271
12. SUBSEQUENT EVENTS
The October Yorkville
Consent
On
October 3, 2024, NioCorp entered into (i) a consent and waiver (the “October Yorkville Consent”) to the April 2024
Notes issued and sold to Yorkville pursuant to the April 2024 Purchase Agreement and (ii) a consent and waiver (together with
the October Yorkville Consent, the “October Consents”) to the April 2024 Notes issued and sold to Lind II pursuant
to the April 2024 Purchase Agreement. The October Consents, among other things, extended the maturity date to January 31, 2025,
reduced the amounts due to the April 2024 Purchasers on October 1, 2024 by an aggregate of $ 1,176 to an aggregate of $ 336 and
deferred such amounts due to the April 2024 Purchasers until January 1, 2025, and prospectively waived any term of the April 2024
Notes that would otherwise be triggered upon a failure of the Company to pay to the April 2024 Purchasers the remainder of the
amount due on October 1, 2024. Except as modified by the September Consents, as discussed in Note 5b, and the October Consents,
the terms of the April 2024 Notes as previously disclosed are unchanged.
The November 2024 Offerings
On November 5, 2024, the Company closed the November 2024 Registered Offering, pursuant to the underwriting
agreement, dated November 3, 2024 (the “Underwriting Agreement”), with Maxim Group LLC, as underwriter (the “Underwriter”),
which consisted of 1,592,356 Common Shares, 1,672,090 Warrants (the “Series A Public Warrants”) to purchase up to an
additional 1,672,090 Common Shares and 836,045 Warrants (the “Series B Public Warrants” and, together with the Series
A Public Warrants, the “November Public Warrants”) to purchase up to an additional 836,045 Common Shares. Each Common
Share was sold together with one Series A Public Warrant and one-half of one Series B Public Warrant at a combined public offering
price of $1.57. The gross proceeds from the November 2024 Registered Offering were approximately $2,500 before deducting underwriting
discounts and offering expenses. The Company entered into a warrant agency agreement with Computershare Inc. and its affiliate,
Computershare Trust Company, N.A., together as warrant agent, setting forth the terms and conditions of the November Public Warrants.
The Series A Public Warrants have an exercise price of $1.75 per underlying Common Share, are exercisable immediately, and will
expire on November 5, 2026. The Series B Public Warrants have an exercise price of $2.07 per underlying Common Share, are exercisable
beginning six months and one day from the date of issuance, and will expire on November 5, 2029. In addition, pursuant to the Underwriting
Agreement, the Company granted the Underwriter a 45-day over-allotment option to purchase (i) 238,853 additional Common Shares
and (ii) 358,280 Option Warrants (as defined below) to purchase up to an aggregate of 358,280 Common Shares. “Option Warrant”
means one Series A Public Warrant combined with one-half of one Series B Public Warrant. On November 4, 2024, the Underwriter partially
exercised its over-allotment option to purchase 79,734 additional Series A Public Warrants and 39,867 additional Series B Public Warrants, which amounts are included in the amounts, discussed above, issued at closing of the November 2024 Registered Offering.
As of September 30, 2024,
the Company had accrued $ 459 of third-party costs related to the November 2024 Registered Offering. These costs were deferred until
the closing of the November 2024 Registered Offering, at which time all costs incurred were charged against the related share capital
account.
On November 13, 2024, the Company closed the November 2024 Private Offering, pursuant to binding subscription
agreements with certain accredited investors as part of a non-brokered private placement of 2,199,602 units of the Company (the
“Units”). Each Unit consists of one Common Share, one Warrant (collectively, the “Series A Private Warrants”)
to purchase one Common Share and one-half of one Warrant to purchase one-half of one Common Share (collectively, the “Series
B Private Warrants”). Each Unit was issued and sold at a price of $1.57. The gross proceeds of the November 2024 Private
Offering were approximately $3,500 before deducting offering expenses. Certain directors and officers of the Company purchased
November 2024 Units at a price of $1.7675 per Unit, which price includes $0.125 per Private Warrant and allows such directors and
officers to participate in the November 2024 Private Offering in accordance with the rules of the Nasdaq. The Series A Private
Warrants have an exercise price of $1.75 per underlying Common Share, are exercisable immediately, and will expire on November
13, 2026. The Series B Private Warrants have an exercise price of $ 2.07 per underlying Common Share, are exercisable beginning six months and one day from the date of
issuance, and will expire on November 13, 2029.
NioCorp currently intends to use the net proceeds from
the November Offerings for working capital and general corporate purposes, including to (i) advance its efforts to launch construction
the Elk Creek Project and move it to commercial operation and (ii) repay the amount outstanding under the Smith Credit Facility. The Smith Loan will continue to be available to the Company following the close of the November Offerings.
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