UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2020
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 000-55710 |
NioCorp Developments Ltd.
(Exact Name of Registrant as Specified in its Charter)
British Columbia, Canada | 98-1262185 | ||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||
7000 South Yosemite Street, Suite 115 (Address of Principal Executive Offices) | 80112 (Zip code) | ||
Registrant’s telephone number, including area code: (855) 264-6267 |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Not Applicable | Not Applicable | Not Applicable |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large Accelerated Filer | ☐ | Accelerated Filer | ☐ |
Non-Accelerated Filer
| ☒ | Smaller Reporting Company | ☒ |
Emerging Growth Company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of February 9, 2018,5, 2021, the registrant had 208,861,265241,081,316 Common Shares outstanding.
TABLE OF CONTENTS
PART I—I — FINANCIAL INFORMATION
Contents
NioCorp Developments Ltd.
Condensed Consolidated Balance Sheets
(expressed in thousands of U.S. dollars, except share data) (unaudited)
As of | |||||||||||
Note | December 31, 2017 | June 30, 2017 | |||||||||
ASSETS | |||||||||||
Current | |||||||||||
Cash | $ | 80 | $ | 238 | |||||||
Restricted cash | 4 | — | 265 | ||||||||
Prepaid expenses and other | 4 | 152 | |||||||||
Other current assets | 5 | 422 | — | ||||||||
Total current assets | 506 | 655 | |||||||||
Non-current | |||||||||||
Deposits | 36 | 51 | |||||||||
Available for sale securities at fair value | 17 | 23 | |||||||||
Equipment | 2 | 5 | |||||||||
Mineral interests | 10,617 | 10,617 | |||||||||
Total assets | $ | 11,178 | $ | 11,351 | |||||||
LIABILITIES | |||||||||||
Current | |||||||||||
Accounts payable and accrued liabilities | $ | 2,772 | $ | 3,146 | |||||||
Related party loans | 8 | 1,355 | 1,175 | ||||||||
Convertible debt, current portion | 6 | 667 | 2,161 | ||||||||
Derivative liability, convertible debt | 82 | — | |||||||||
Total current liabilities | 4,876 | 6,482 | |||||||||
Convertible debt, net of current portion | 6 | 1,609 | 1,896 | ||||||||
Derivative liability, convertible debt | 6 | — | 82 | ||||||||
Total liabilities | 6,485 | 8,460 | |||||||||
SHAREHOLDERS’ EQUITY | |||||||||||
Common stock, unlimited shares authorized; shares outstanding: 208,861,265 and 198,776,337, respectively | 7 | 72,583 | 68,029 | ||||||||
Additional paid-in capital | 11,599 | 10,320 | |||||||||
Accumulated deficit | (78,625 | ) | (74,852 | ) | |||||||
Accumulated other comprehensive loss | (864 | ) | (606 | ) | |||||||
Total equity | 4,693 | 2,891 | |||||||||
Total liabilities and equity | $ | 11,178 | $ | 11,351 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
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 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
Operating expenses | |||||||||||||||||||
Employee related costs | $ | 751 | $ | 459 | $ | 1,399 | $ | 962 | |||||||||||
Professional fees | 118 | 279 | 393 | 612 | |||||||||||||||
Exploration expenditures | 9 | 303 | 2,397 | 1,016 | 4,367 | ||||||||||||||
Other operating expenses | 391 | 215 | 687 | 389 | |||||||||||||||
Total operating expenses | 1,563 | 3,350 | 3,495 | 6,330 | |||||||||||||||
Change in financial instrument fair value | 6 | 274 | (39 | ) | 297 | (335 | ) | ||||||||||||
Foreign exchange loss (gain) | 36 | 160 | (201 | ) | 193 | ||||||||||||||
Interest expense | 91 | 71 | 175 | 140 | |||||||||||||||
(Loss) gain on available for sale securities | (4 | ) | 5 | 7 | (6 | ) | |||||||||||||
Loss before income taxes | 1,960 | 3,547 | 3,773 | 6,322 | |||||||||||||||
Income tax benefit | — | — | — | — | |||||||||||||||
Net loss | $ | 1,960 | $ | 3,547 | $ | 3,773 | $ | 6,322 | |||||||||||
Other comprehensive loss: | |||||||||||||||||||
Net loss | $ | 1,960 | $ | 3,547 | $ | 3,773 | $ | 6,322 | |||||||||||
Other comprehensive (gain) loss: | |||||||||||||||||||
Reporting currency translation | (27 | ) | (165 | ) | 258 | (231 | ) | ||||||||||||
Total comprehensive loss | $ | 1,933 | $ | 3,382 | $ | 4,031 | $ | 6,091 | |||||||||||
Loss per common share, basic | $ | 0.01 | $ | 0.02 | $ | 0.02 | $ | 0.03 | |||||||||||
Weighted average common shares outstanding | 206,000,263 | 183,625,989 | 204,027,181 | 182,078,028 |
As of | ||||||||||||
Note | December 31, 2020 | June 30, 2020 | ||||||||||
ASSETS | ||||||||||||
Current | ||||||||||||
Cash | $ | 133 | $ | 307 | ||||||||
Prepaid expenses and other | 51 | 31 | ||||||||||
Total current assets | 184 | 338 | ||||||||||
Non-current | ||||||||||||
Deposits | 35 | 35 | ||||||||||
Investment in equity securities | 9 | 7 | ||||||||||
Right of use assets | 10 | 221 | — | |||||||||
Mineral interests | 10,617 | 10,617 | ||||||||||
Total assets | $ | 11,066 | $ | 10,997 | ||||||||
LIABILITIES | ||||||||||||
Current | ||||||||||||
Accounts payable and accrued liabilities | 4 | $ | 1,408 | $ | 3,065 | |||||||
Related party loan | 8 | 3,818 | 3,818 | |||||||||
Convertible debt | 5 | 2,075 | 838 | |||||||||
Notes payable, current portion | 6 | 212 | 258 | |||||||||
Operating lease liability | 10 | 80 | — | |||||||||
Derivative liability, convertible debt | 5 | 62 | 33 | |||||||||
Total current liabilities | 7,655 | 8,012 | ||||||||||
Non-current | ||||||||||||
Notes payable, net of current portion | 6 | 137 | 344 | |||||||||
Operating lease liability | 10 | 153 | — | |||||||||
Total liabilities | 7,945 | 8,356 | ||||||||||
SHAREHOLDERS’ EQUITY | ||||||||||||
Common stock, unlimited shares authorized; shares outstanding: 240,110,267 at December 31, 2020 and 235,925,684 at June 30, 2020 | 7 | 86,839 | 84,476 | |||||||||
Additional paid-in capital | 13,844 | 13,206 | ||||||||||
Accumulated deficit | (96,820 | ) | (94,686 | ) | ||||||||
Accumulated other comprehensive loss | (742 | ) | (355 | ) | ||||||||
Total shareholder equity | 3,121 | 2,641 | ||||||||||
Total liabilities and equity | $ | 11,066 | $ | 10,997 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
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 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
Operating expenses | ||||||||||||||||||||
Employee related costs | $ | 686 | $ | 345 | $ | 1,005 | $ | 699 | ||||||||||||
Professional fees | 85 | 67 | 193 | 185 | ||||||||||||||||
Exploration expenditures | 9 | 189 | 454 | 414 | 677 | |||||||||||||||
Other operating expenses | 253 | 135 | 664 | 332 | ||||||||||||||||
Total operating expenses | 1,213 | 1,001 | 2,276 | 1,893 | ||||||||||||||||
Other income | 6 | (186 | ) | — | (186 | ) | — | |||||||||||||
Loss on debt extinguishment | 5 | 163 | — | 163 | — | |||||||||||||||
Change in financial instrument fair value | 5 | 62 | 81 | 28 | 88 | |||||||||||||||
Foreign exchange gain | (302 | ) | (79 | ) | (403 | ) | (36 | ) | ||||||||||||
Interest expense | 131 | 73 | 258 | 133 | ||||||||||||||||
Other (Gain) loss on equity securities | — | — | (2 | ) | 3 | |||||||||||||||
Loss before income taxes | 1,081 | 1,076 | 2,134 | 2,081 | ||||||||||||||||
Income tax benefit | — | — | — | — | ||||||||||||||||
Net loss | 3 | $ | 1,081 | $ | 1,076 | $ | 2,134 | $ | 2,081 | |||||||||||
Other comprehensive loss: | ||||||||||||||||||||
Net loss | $ | 1,081 | $ | 1,076 | $ | 2,134 | $ | 2,081 | ||||||||||||
Other comprehensive loss (gain): | ||||||||||||||||||||
Reporting currency translation | 257 | 231 | 387 | 43 | ||||||||||||||||
Total comprehensive loss | $ | 1,338 | $ | 1,307 | $ | 2,521 | $ | 2,124 | ||||||||||||
Loss per common share, basic and diluted | $ | 0.00 | $ | 0.00 | $ | 0.01 | $ | 0.01 | ||||||||||||
Weighted average common shares outstanding | 239,060,052 | 234,738,616 | 237,965,059 | 234,247,239 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Condensed Consolidated Statements of Cash Flows
(expressed in thousands of U.S. dollars) (unaudited)
For the six months ended December 31, | For the six months ended December 31, | |||||||||||||||
2017 | 2016 | 2020 | 2019 | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||||
Total loss for the period | $ | (3,773 | ) | $ | (6,322 | ) | $ | (2,134 | ) | $ | (2,081 | ) | ||||
Non-cash elements included in net loss: | ||||||||||||||||
Depreciation | 3 | 4 | ||||||||||||||
Change in financial instrument fair value | 297 | (335 | ) | 28 | 88 | |||||||||||
Unrealized gain (loss) on available-for-sale investments | 7 | (6 | ) | |||||||||||||
Unrealized (gain) loss on equity securities | (2 | ) | 3 | |||||||||||||
Accretion of convertible debt | 75 | 54 | 3 | — | ||||||||||||
Noncash lease expense | 11 | — | ||||||||||||||
Loss on debt extinguishment | 163 | — | ||||||||||||||
Gain on debt forgiveness | (186 | ) | — | |||||||||||||
Foreign exchange (gain) loss | (197 | ) | 228 | (319 | ) | (30 | ) | |||||||||
Share-based compensation | 1,113 | 394 | 797 | 117 | ||||||||||||
(2,475 | ) | (5,983 | ) | (1,639 | ) | (1,903 | ) | |||||||||
Change in working capital items: | ||||||||||||||||
Receivables | 7 | — | ||||||||||||||
Prepaid expenses | 144 | 68 | (17 | ) | 63 | |||||||||||
Accounts payable and accrued liabilities | (242 | ) | 842 | (103 | ) | 460 | ||||||||||
Net cash used in operating activities | (2,566 | ) | (5,073 | ) | (1,759 | ) | (1,380 | ) | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||||
Deposits | 15 | — | ||||||||||||||
Net cash used in investing activities | 15 | — | ||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||||||
Proceeds from issuance of capital stock | 1,545 | 1,675 | 1,636 | — | ||||||||||||
Share issue costs | (189 | ) | ||||||||||||||
Issuance of convertible debt | 1,000 | |||||||||||||||
Loan repayments | (67 | ) | — | |||||||||||||
Related party debt drawdown | 180 | — | 1,080 | |||||||||||||
Other current assets | (422 | ) | ||||||||||||||
Net cash provided by financing activities | 2,114 | 1,675 | 1,569 | 1,080 | ||||||||||||
Exchange rate effect on cash, cash equivalents and restricted cash | 14 | (20 | ) | |||||||||||||
Change in cash, cash equivalents and restricted cash during period | (423 | ) | (3,418 | ) | ||||||||||||
Cash, cash equivalents and restricted cash, beginning of period | 503 | 4,412 | ||||||||||||||
Cash, cash equivalents and restricted cash, end of period | $ | 80 | $ | 994 | ||||||||||||
Exchange rate effect on cash and cash equivalents | 16 | (1 | ) | |||||||||||||
Change in cash and cash equivalents during period | (174 | ) | (301 | ) | ||||||||||||
Cash and cash equivalents, beginning of period | 307 | 357 | ||||||||||||||
Cash and cash equivalent, end of period | $ | 133 | $ | 56 | ||||||||||||
Supplemental cash flow information: | ||||||||||||||||
Amounts paid for interest | $ | 32 | $ | 32 | $ | 37 | $ | 32 | ||||||||
Amounts paid for income taxes | — | — | ||||||||||||||
Non-cash financing transactions | ||||||||||||||||
Lind conversions | 3,030 | 983 | $ | 38 | $ | 933 | ||||||||||
Debt to equity conversion | 207 | — | ||||||||||||||
Nordmin conversions | 418 | — | ||||||||||||||
Recognition of operating lease liabilities | 231 | — | ||||||||||||||
Loan amounts forgiven | 186 | — | ||||||||||||||
Accounts payable to convertible debt conversion | 1,693 | — |
The accompanying notes are an integral part of these condensed consolidated financial statements.
NioCorp Developments Ltd.
Condensed Consolidated Statements of Shareholders’ Equity
(expressed in thousands of U.S. dollars, except for Common Shares Outstanding)outstanding) (unaudited)
Common Shares Outstanding |
Common Stock | Additional Paid-in Capital |
Deficit | Accumulated Other Comprehensive Loss |
Total | |||||||||||||||||||
Balance, June 30, 2016 | 180,467,990 | $ | 58,401 | $ | 8,630 | $ | (60,222 | ) | $ | (615 | ) | $ | 6,194 | |||||||||||
Exercise of warrants | 3,447,137 | 1,675 | — | — | — | 1,675 | ||||||||||||||||||
Exercise of options | 150,000 | 70 | — | — | — | 70 | ||||||||||||||||||
Fair value of broker warrants granted | — | — | 20 | — | — | 20 | ||||||||||||||||||
Fair value of Lind warrants granted | — | — | 233 | — | — | 233 | ||||||||||||||||||
Private placements - February 2017 | 7,364,789 | 3,927 | — | — | — | 3,927 | ||||||||||||||||||
Debt conversions | 7,346,421 | 4,103 | — | — | — | 4,103 | ||||||||||||||||||
Share issuance costs | — | (181 | ) | — | — | — | (181 | ) | ||||||||||||||||
Fair value of stock options exercised | — | 34 | (34 | ) | — | — | — | |||||||||||||||||
Share-based payments | — | — | 1,471 | — | — | 1,471 | ||||||||||||||||||
Reporting currency presentation | — | — | — | — | 9 | 9 | ||||||||||||||||||
Loss for the year | — | — | — | (14,630 | ) | — | (14,630 | ) | ||||||||||||||||
Balance, June 30, 2017 | 198,776,337 | $ | 68,029 | $ | 10,320 | $ | (74,852 | ) | $ | (606 | ) | $ | 2,891 | |||||||||||
Exercise of options | 10,091 | 5 | — | — | — | 5 | ||||||||||||||||||
Fair value of broker warrants granted | — | — | 41 | — | — | 41 | ||||||||||||||||||
Fair value of Lind warrants granted | — | — | 127 | — | — | 127 | ||||||||||||||||||
Private placements - July 2017 | 2,962,500 | 1,540 | — | — | — | 1,540 | ||||||||||||||||||
Private placement – September 2017 | 415,747 | 207 | 207 | |||||||||||||||||||||
Debt conversions | 6,696,590 | 3,030 | — | — | — | 3,030 | ||||||||||||||||||
Share issuance costs | — | (230 | ) | — | — | — | (230 | ) | ||||||||||||||||
Fair value of stock options exercised | — | 2 | (2 | ) | — | — | — | |||||||||||||||||
Share-based payments | — | — | 1,113 | — | — | 1,113 | ||||||||||||||||||
Reporting currency presentation | — | — | — | — | (258 | ) | (258 | ) | ||||||||||||||||
Loss for the period | — | — | — | (3,773 | ) | — | (3,773 | ) | ||||||||||||||||
Balance, December 31, 2017 | 208,861,265 | $ | 72,583 | $ | 11,599 | $ | (78,625 | ) | $ | (864 | ) | $ | 4,693 |
For the six months ended December 31, 2020 and 2019 | ||||||||||||||||||||||||
Common Shares Outstanding | Common Stock | Additional Paid-in Capital | Deficit | Accumulated Other Comprehensive Loss | Total | |||||||||||||||||||
Balance, June 30, 2019 | 232,496,215 | $ | 82,939 | $ | 13,124 | $ | (90,685 | ) | $ | (526 | ) | $ | 4,852 | |||||||||||
Debt conversions | 2,343,383 | 933 | — | — | — | 933 | ||||||||||||||||||
Share-based payments | — | — | 117 | — | — | 117 | ||||||||||||||||||
Reporting currency presentation | — | — | — | — | (43 | ) | (43 | ) | ||||||||||||||||
Loss for the period | — | — | — | (2,081 | ) | — | (2,081 | ) | ||||||||||||||||
Balance, December 31, 2019 | 234,839,598 | $ | 83,872 | $ | 13,241 | $ | (92,766 | ) | $ | (569 | ) | $ | 3,778 | |||||||||||
Balance, June 30, 2020 | 235,925,684 | $ | 84,476 | $ | 13,206 | $ | (94,686 | ) | $ | (355 | ) | $ | 2,641 | |||||||||||
Exercise of options | 438,617 | 244 | (103 | ) | — | — | 141 | |||||||||||||||||
Exercise of warrants | 2,777,422 | 1,614 | (119 | ) | — | — | 1,495 | |||||||||||||||||
Fair value of warrants granted | — | — | 63 | — | — | 63 | ||||||||||||||||||
Debt conversions | 968,544 | 506 | — | — | — | 506 | ||||||||||||||||||
Share issuance costs | — | (1 | ) | — | — | — | (1 | ) | ||||||||||||||||
Share-based payments | — | — | 797 | — | — | 797 | ||||||||||||||||||
Reporting currency presentation | — | — | — | — | (387 | ) | (387 | ) | ||||||||||||||||
Loss for the period | — | — | — | (2,134 | ) | — | (2,134 | ) | ||||||||||||||||
Balance, December 31, 2020 | 240,110,267 | $ | 86,839 | $ | 13,844 | $ | (96,820 | ) | $ | (742 | ) | $ | 3,121 |
For the three months ended December 31, 2020 and 2019 | ||||||||||||||||||||||||
Common Shares Outstanding | Common Stock | Additional Paid-in Capital | Deficit | Accumulated Other Comprehensive Loss | Total | |||||||||||||||||||
Balance, September 30, 2019 | 234,293,107 | $ | 83,641 | $ | 13,050 | $ | (91,690 | ) | $ | (338 | ) | $ | 4,663 | |||||||||||
Debt conversions | 546,491 | 231 | — | — | — | 231 | ||||||||||||||||||
Share-based payments | — | — | 191 | — | — | 191 | ||||||||||||||||||
Reporting currency presentation | — | — | — | — | (231 | ) | (231 | ) | ||||||||||||||||
Loss for the period | — | — | — | (1,076 | ) | — | (1,076 | ) | ||||||||||||||||
Balance, December 31, 2019 | 234,839,598 | $ | 83,872 | $ | 13,241 | $ | (92,766 | ) | $ | (569 | ) | $ | 3,778 | |||||||||||
Balance, September 30, 2020 | 238,667,620 | $ | 85,942 | $ | 13,462 | $ | (95,739 | ) | $ | (485 | ) | $ | 3,180 | |||||||||||
Exercise of options | 229,500 | 165 | (55 | ) | — | — | 110 | |||||||||||||||||
Exercise of warrants | 308,901 | 263 | (119 | ) | — | — | 144 | |||||||||||||||||
Fair value of warrants granted | — | — | 63 | — | — | 63 | ||||||||||||||||||
Debt conversions | 904,246 | 469 | — | — | — | 469 | ||||||||||||||||||
Share issuance costs | — | — | — | — | — | — | ||||||||||||||||||
Share-based payments | — | — | 493 | — | — | 493 | ||||||||||||||||||
Reporting currency presentation | — | — | — | — | (257 | ) | (257 | ) | ||||||||||||||||
Loss for the period | — | — | — | (1,081 | ) | — | (1,081 | ) | ||||||||||||||||
Balance, December 31, 2020 | 240,110,267 | $ | 86,839 | 13,844 | (96,820 | ) | $ | (742 | ) | $ | 3,121 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
December 31, 20172020
(expressed in thousands of U.S. dollars, unlessexcept per share amounts or as otherwise stated) (unaudited)
1. | DESCRIPTION OF BUSINESS |
NioCorp Developments Ltd. (“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 Niobium/Scandium/Titanium property (the “Elk Creek Project”) located in southeastern Nebraska.
These 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.Project to construction and commercial operation. The Company’s ability to continue as a going concern is uncertain and is dependent upon obtaining sufficient financing, 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 unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles of the United States of America (“US 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-ownedwholly 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, 2017.2020.
In the opinion of Management,management, all adjustments considered necessary (including reclassifications and normal recurring adjustments) to present fairly the financial position, results of operations, and cash flows at December 31, 2017,2020, 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 US 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, 2017.2020. The interim results are not necessarily indicative of results for the full year ending June 30, 2018,2021, or future operating periods.
b) | Recent Accounting Standards |
Issued and Adopted
In March 2016, the Financial Accounting Standards Board (“FASB”) issuedOn July 1, 2020, NioCorp adopted Accounting Standards Update (“ASU”) 2016-09, Improvements2018-13 - Fair Value Measurements (Topic 820): Disclosure Framework - Changes to Employee Share-Based Payment Accounting. The amendmentsthe Disclosure Requirements for Fair Value Measurement. This update modifies the disclosure requirements on fair value measurements in this ASU require, among other things,Topic 820 and eliminates ‘at a minimum’ from the phrase ‘an entity shall disclose at a minimum’ to promote the appropriate exercise of discretion by entities when considering fair value disclosures and to clarify that all income tax effects of awards be recognized in the income statement when the awards vest or are settled. The ASU also allows formateriality is an employer to repurchase more of an employee’s shares than it can today for tax withholding purposes without triggering liability accounting, and it allows for a policy election to account for forfeitures as they occur. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. We adopted this guidance during the quarter ended September 30, 2017.appropriate consideration. The adoption of this ASUstandard had no material impactsimpact on ourthe consolidated financial statement results or disclosures.statements.
Issued and Not Effective
From time to time, new accounting pronouncements are issued by the FASBFinancial Accounting Standards Board 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.
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
December 31, 20172020
(expressed in thousands of U.S. dollars, unlessexcept per share amounts or as otherwise stated) (unaudited)
In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The update clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company will apply the provisions of the update to potential future acquisitions occurring after the effective date.
In February 2016, the FASB issued ASU 2016-02, Leases. The standard requires that a lessee recognize on the balance sheet assets and liabilities for leases with lease terms of more than twelve months. The recognition, measurement, and presentation of expenses and cash flows arising from a lease have not significantly changed from the previous US GAAP. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within such fiscal year, with early adoption permitted. The Company is currently assessing the impact, if any, of implementing this guidance on its consolidated financial position, results of operations, and liquidity.
c) | Use of Estimates |
The preparation of consolidated financial statements in conformity with US GAAP requires Managementmanagement 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 deferred income tax asset valuations, convertible debt valuations, 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.
Certain prior year amounts have been reclassified to conform to fiscal 2018 presentation and these reclassifications had no effect on the reported results of operations or net equity as previously disclosed.
3. | GOING CONCERN ISSUES |
The Company incurred a loss of $3,773$2,134 for the six months ended December 31, 2017 (20162020 (2019 - $6,322),$2,081) and had a working capital deficit and an accumulated deficit of $4,370$7,471 and $78,625,$96,820, respectively, as of December 31, 2017. These factors indicate2020. As an exploration stage entity, the existence of a material uncertainty that raises substantial doubt about the Company’s ability to continue as a going concern.Company has not yet commenced its mining operations and accordingly does not generate any revenue.
The Company’s ability to continue operations and fund its expenditures, which have historically averaged $700 to $850 per quarter, is dependent on Management’smanagement’s ability to secure additional financing. As of December 31, 2020, the Company had cash of $133, which is not sufficient cash to fund normal operations and meet debt obligations for the next twelve months without deferring payment on certain current liabilities and raising additional funds. Management is actively pursuing such 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. The Company has approximately $700 available on its non-revolving credit facility agreement with a related party (refer to Note 8), however, the Company did not have any further funding commitments or arrangements for additional financing as of December 31, 2020. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
These consolidated financial statements do not give effect to any adjustments required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying financial statements.
Restricted cash represents amounts heldSince March 2020, several measures have been implemented in escrow to secure paymentthe United States, Canada, and the rest of work relatedthe world in response to the Company’s Elk Creek Feasibility Study. Underincreased impact from the termsnovel coronavirus (“COVID-19”) pandemic. While the impact of the escrow agreement,COVID-19 pandemic is expected to be temporary, the balancecurrent circumstances are dynamic and the impact on business operations cannot be reasonably estimated at this time. The continued spread of $265 was drawn against outstanding accounts payableCOVID-19 has resulted in business travel restrictions and other capital market disruptions, and this has had an impact on the following: the Company’s ability to obtain financing and advance development plans; and the Company’s results of operations, financial position, and cash flows during the quarter ended September 30, 2017.current fiscal year.
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
December 31, 20172020
(expressed in thousands of U.S. dollars, unlessexcept per share amounts or as otherwise stated) (unaudited)
As of | ||||||||||||
Note | December 31, 2020 | June 30, 2020 | ||||||||||
Accounts payable, trade | $ | 661 | $ | 2,460 | ||||||||
Interest payable to related party | 8 | 667 | 450 | |||||||||
Other accruals | 80 | 155 | ||||||||||
Total accounts payable and accrued liabilities | $ | 1,408 | $ | 3,065 |
Other current assets include legal and other professional fees associated with obtaining project debt financing
On December 18, 2020, an accounts payable balance of $1,640 was exchanged for the Elk Creek Project. Amounts will be deferred until funding is completed, at which time the balance will become a direct deduction from the related debt liability.convertible note as discussed in Note 5.
CONVERTIBLE DEBT |
As of | ||||||||
December 31, 2017 | June 30, 2017 | |||||||
Convertible debt, current portion | $ | 667 | $ | 2,161 | ||||
Noncurrent: | ||||||||
Convertible notes | $ | — | $ | 592 | ||||
Convertible security | 1,609 | 1,304 | ||||||
$ | 1,609 | $ | 1,896 |
As of | ||||||||
December 31, 2020 | June 30, 2020 | |||||||
Nordmin convertible note | $ | 1,325 | $ | — | ||||
Convertible promissory notes | 750 | 800 | ||||||
Convertible security | — | 38 | ||||||
Total convertible debt | $ | 2,075 | $ | 838 |
Nordmin Convertible Security FundingNote
Changes in the Lind Partners Asset Management IV, LLC (“Lind”) convertible security (the “Convertible Security”) balance are comprised of the following:
Convertible Security | ||||
Balance, June 30, 2017 | $ | 3,465 | ||
Additional debt drawdown | 1,000 | |||
Conversions, at fair value | (3,030 | ) | ||
Change in fair market value | 174 | |||
Balance, December 31, 2017 | $ | 1,609 |
On August 10, 2017, Lind provided notice toDecember 18, 2020, the Company issued a convertible note in the principal amount of its electionapproximately $1,872 (the “Nordmin Note”) and 500,000 warrants (the “Nordmin Warrants”) to advance an additional $1.0 million in funding (the “Initial Convertible Security Increase”) under the convertible security (the ‘Initial Convertible Security”Nordmin Engineering Ltd. (“Nordmin”) pursuant to its righta convertible note and warrant subscription agreement (the “Nordmin Agreement”) under which Nordmin agreed to subscribe for and purchase the Convertible Security Funding Agreement, dated December 14, 2015, betweenNordmin Note and Nordmin Warrants for a subscription price of approximately $1,804. This amount was set off against the Company and Lind (the “Lind Agreement”). As a result, upon payment of the additional $1,000 in fundingamount owed to Nordmin by Lind to the Company, the face value of the Initial Convertible Security was increased by $1,200 ($1,000 in additional funding plus implied interest), and the Company issued Warrants to Lind, as follows:NioCorp for past services.
Black Scholes pricing model inputs | ||||||||||||||||||||||||||||
Funding Date | Face Value1 | Warrants Issued2 | Issue Price3 | Warrant Expiry Date | Risk-free rate | Yield | Volatility | Expected Life | ||||||||||||||||||||
August 15, 2017 | $ | 300 | 260,483 | C$0.73 | August 15, 2020 | 1.23 | % | 0 | % | 49.6 | % | 3 years | ||||||||||||||||
September 28, 2017 | 300 | 283,413 | C$0.66 | September 28, 2020 | 1.23 | % | 0 | % | 47.7 | % | 3 years | |||||||||||||||||
October 31, 2017 | 300 | 308,901 | C$0.62 | October 31, 2020 | 1.59 | % | 0 | % | 47.0 | % | 3 years | |||||||||||||||||
December 6, 2017 | 300 | 355,132 | C$0.54 | December 6, 2020 | 1.59 | % | 0 | % | 48.9 | % | 3 years | |||||||||||||||||
Total | $ | 1,200 | 1,207,929 |
The Initial Convertible SecurityNordmin Note will mature on December 18, 2021 and has no stated interest rate, an implied interest rate of 5% per annum and, subject to certain terms and conditions, is convertible into Common Sharesup to 4,500,000 common shares of the Company (Common(“Common Shares”) at a conversion price equal to 85%of 92% of the volume weightedfive-day volume-weighted average trading price (“Volume Weighted Average Price”) of the Common Shares (in Canadian dollars) on the Toronto Stock Exchange (the “TSX”) forat the five consecutive trading days immediately prior totime of conversion. The Nordmin Note contains restrictions on how much of the date on which Lindprincipal amount may be converted in any 30-day period. The Nordmin Note also provides the Company with the option to prepay, in whole or in part, any outstanding principal amount thereunder, upon three days’ notice of its intention to convert an amountNordmin. In addition, Nordmin is entitled to accelerate the maturity of the Initial Convertible Security from timeNordmin Note and require the Company to time. Duringprepay the six-month period ended December 31, 2017, $2,425outstanding principal amount upon the occurrence of an event of default and other designated events described in the Nordmin Note.
Subject to certain terms and conditions, each Nordmin Warrant is exercisable into one Common Share at a price of C$0.80 per share until December 18, 2022. The Nordmin Note and the Nordmin Warrants are, and the Common Shares underlying the Nordmin Warrants, will be, as applicable, subject to resale restrictions and are or will be “restricted securities” within the meaning of Rule 144 under the United States Securities Act of 1933.
The Company accounted for this transaction as a debt extinguishment under Accounting Standards Codification 470, Debt. Accordingly, the Company wrote off the value of the Initial Convertible Securityexisting obligation, calculated the fair value of the Nordmin Note and recorded a loss of $163 on the difference in the consolidated statement of operations. This loss included $63 related to the fair value of the Nordmin Warrants at closing. The fair value of the Nordmin Warrants was converted into 6,696,590 Common Shares.estimated based on the Black Scholes pricing model using a risk-free interest rate of 0.32%, an expected dividend yield of 0%, a volatility of 43.16%, and an expected life of 2.0 years.
The Company initially recorded the Nordmin Note at a fair value of $1,740. The remaining initial fair value balance will be accreted up to net face value of the Nordmin Note over the remaining time until maturity using the effective interest method. In addition, transaction costs of $25 were expensed at closing.
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
December 31, 20172020
(expressed in thousands of U.S. dollars, unlessexcept per share amounts or as otherwise stated) (unaudited)
The Convertible Security contains financial and non-financial covenants customary for a facility of its size and nature, and includes a financial covenant defining an event of default as all present and future liabilitiesPursuant to the terms of the Nordmin Agreement, on December 18, 2020, the Company or anyissued 836,551 Common Shares to Nordmin upon an initial conversion of its subsidiaries, exclusive$450 in principal amount of related party loans, for an amount or amounts exceeding $2,000 and which have not been satisfiedthe Nordmin Note at a conversion price of C$0.684 per share.
Based on time or within 90 daysthe Company’s closing Common Share price of invoice, or have become prematurely payable as a result of its default or breach. The Company was in compliance with these covenantsC$0.81 as of December 31, 2017.2020, conversion of the remaining Nordmin Note balance would require the issuance of 2,428,888 Common Shares. For each C$0.01 change in the fair value of one Common Share, the total shares the Company would be obligated to issue would change by approximately 30,000 shares.
Convertible Promissory Notes
Changes in
Effective October 12, 2020, the maturity date for $750 of the Company’s outstanding convertible promissory notes (the “Convertible Notes”) balance are comprisedwas extended for one year to October 14, 2021. All terms and conditions remained unchanged, except the amended agreement provides that the Company may repay all or any of the following:amount of outstanding principal and any accrued but unpaid interest, with 14 days’ advance written notice (the “Notice”), as follows:
Convertible Notes | ||||
Balance, June 30, 2017 | $ | 592 | ||
Accreted interest, net of interest paid | 75 | |||
Balance, December 31, 2017 | $ | 667 |
● | with respect to the outstanding principal and any accrued but unpaid interest, in cash, using the Bank of Canada daily US$-C$ exchange rate on the date of the Notice; or | |
● | with respect to the outstanding principal only, provided that the volume weighted average trading price of the Common Shares is C$0.97 or greater for a period of ten consecutive trading days prior to the date of the Notice, and subject to Toronto Stock Exchange approval, by converting all or any portion of the outstanding principal into Common Shares at a conversion rate of C$0.97 per Common Share, using the Bank of Canada daily US$-C$ exchange rate on the date of the Notice. |
$50 of the Company’s convertible promissory notes was not extended under the agreement above and was converted into 67,695 Common Shares on October 14, 2020.
The changes in the derivative liability related to the conversion feature of the Convertible Notescompany’s convertible promissory notes are as follows:
Derivative Liability | ||||
Balance, June 30, 2017 | $ | 82 | ||
Change in fair value of derivative liability | (— | ) | ||
Balance, December 31, 2017 | $ | 82 |
Derivative Liability | ||||
Balance, June 30, 2020 | $ | 33 | ||
Change in fair value of derivative liability | 29 | |||
Balance, December 31, 2020 | $ | 62 |
Convertible Security
On July 26, 2017,9, 2020, Lind Asset Management IV, LLC, the Company closed a brokered private placement (the “July 2017 Private Placement”) of units (the “Units”)holder of the Company. Underconvertible security, converted the July 2017 Private Placement, a totalremaining balance thereunder of 2,962,500 Units were issued at C$0.65 per Unit, for total gross proceeds to the Company of approximately C$1,926. Each Unit issued pursuant to the July 2017 Private Placement consists of one$38 into 64,298 Common Share and one warrant of the Company (“Warrant”). Each Warrant entitles the holder thereof to purchase one additional Common Share at a price of C$0.79 until July 26, 2021.
The July 2017 Private Placement was brokered by Mackie Research Capital Corporation (the “Agent”). The Company paid the Agent an aggregate cash commission of approximately C$125, equal to six and a half per cent (6.5%) of the gross proceeds raised under the July 2017 Private Placement. The Company also issued to the Agent 192,562 broker warrants (the “Broker Warrants”), equal to six and a half per cent (6.5%) of the Units sold pursuant to the July 2017 Private Placement. Each Broker Warrant entitles the holder thereof to purchase one Common Share at a price of C$0.79 until July 26, 2021. The fair value of the Broker Warrants of $41 was estimated based on the Black Scholes pricing model using a risk-free interest rate of 1.32%, an expected dividend yield of 0%, a volatility of 60.3%, and an expected life of four years. Total cash issue costs including agents’ commission, legal and other fees was $189.
Proceeds of the July 2017 Private Placement were used for general working capital purposes and to continue to advance the Company’s Elk Creek Project.
On September 5, 2017, the Company entered into a shares-for-debt agreement with Northcott Capital Limited (“Northcott”) whereby NioCorp issued 415,747 Common Shares to settle a debt of C$253,606 owed to Northcott for past and prospective services through December 2017. Northcott manages NioCorp’s current effort to assemble a debt financing package as part of the Company’s overall Elk Creek Project financing effort. The shares issued to Northcott were priced at C$0.61 per share, which represents a 10% premium over the five-day Volume Weighted Average Price of the Common Shares of C$0.5571 as of the date of the agreement.Shares.
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
December 31, 2017
2020
(expressed in thousands of U.S. dollars, unlessexcept per share amounts or as otherwise stated) (unaudited)
6. | NOTES PAYABLE |
As of | ||||||||
December 31, 2020 | June 30, 2020 | |||||||
Current Portion: | ||||||||
Vendor note | $ | 202 | $ | 166 | ||||
SBA loan | 10 | 92 | ||||||
Total current portion | $ | 212 | $ | 258 | ||||
Noncurrent Portion: | ||||||||
Vendor note | $ | 137 | $ | 240 | ||||
SBA Loan | — | 104 | ||||||
Total noncurrent portion | $ | 137 | $ | 344 |
SBA Loan
On April 17, 2020, the NioCorp’s subsidiary, Elk Creek Resources Corp., received a U.S. Small Business Administration Loan (the “SBA Loan”) from American National Bank, pursuant to the Paycheck Protection Program (the “PPP”) established under the Coronavirus Aid, Relief, and Economic Security Act, commonly referred to as the CARES Act, in the amount of $196. Under the terms of the SBA Loan, the Company may be eligible for full or partial loan forgiveness. The unforgiven portion of the SBA Loan is payable over two years at an annual interest rate of 1%, with a deferral of payments for the first six months. The Company used the proceeds for purposes consistent with the PPP.
On October 27, 2020, the Company applied for loan forgiveness of $186, comprising the initial SBA Loan balance less $10 representing an Economic Injury Disaster Loan Advance grant (the “EIDL advance”) received by the Company in April 2020. On November 18, 2020, the Company was notified that the $186 loan forgiveness request had been approved and recorded a corresponding gain in other income in the consolidated statement of operations.
On December 21, 2020, the U.S. Congress passed the Consolidated Appropriations Act, 2021 (the “Act”), which provided additional COVID-19 relief as well as government funding and other bills. The Act removes the previous requirement that PPP borrowers deduct the amount of any EIDL advance from their PPP forgiveness amount. The Small Business Administration is currently developing the guidance and procedures associated with this change in statute, and the Company expects to apply for this additional forgiveness once the process is completed.
COMMON STOCK | ||
a) | Stock Options |
On November 9, 2017, the Company’s shareholders voted to approve a new Long-Term Incentive Plan (the “Long-Term Incentive Plan”) and the granting of incentive securities thereunder until November 9, 2020. Under the Long-Term Incentive Plan, the Company’s Board of Directors (the “Board”) may, in its discretion from time to time, grant Options and share units (in the form of RSUs and PSUs) to directors, employees and certain other service providers (as defined in the Long-Term Incentive Plan) of the Company and affiliated entities selected by the Board.
Number of Options | Weighted Average Exercise Price (C$) | ||||||||
Balance, June 30, 2020 | 19,129,409 | $ | 0.62 | ||||||
Granted | 3,700,000 | 0.78 | |||||||
Exercised | (438,617 | ) | 0.56 | ||||||
Cancelled/expired | (165,883 | ) | 0.47 | ||||||
Balance, December 31, 2020 | 22,224,909 | $ | 0.65 |
Subject to adjustment as described in the Long-Term Incentive Plan, the aggregate number of Common Shares that may be reserved for issuance to participants under the Long-Term Incentive Plan, together with all other security -based compensation arrangements of the Company, including with respect to Options outstanding under the Company’s 2016 Incentive Stock Option Plan, may not exceed 10% of the issued and outstanding Common Shares from time to time, and the Common Shares reserved for issuance upon settlement of share units shall not exceed 5% of the issued and outstanding Common Shares from time to time. The Long-Term Incentive Plan limits the maximum number of Common Shares issued to insiders (as defined under TSX rules for this purpose) within any one-year period, or issuable to insiders at any time, in the aggregate, under all security -based compensation arrangements (including the Long-Term Incentive Plan) to 10% of the then issued and outstanding Common Shares. The Long-Term Incentive Plan also limits the aggregate number of Common Shares that may be reserved for issuance to any one participant under the Long-Term Incentive Plan, together with all other security -based compensation arrangements of the Company, to 5% of the then issued and outstanding Common Shares (on a non-diluted basis). Under the Long-Term Incentive Plan, Options and share units granted to non-employee directors, together with all other equity awards, are limited to an annual equity award value of C$150 per non-employee director. The total value of Options issuable to a non-employee director in a one-year period is limited to C$100. Further, and subjectNioCorp Developments Ltd.
Notes to the adjustment provisionsCondensed Consolidated Financial Statements
December 31, 2020
(expressed in thousands of the Long-Term Incentive Plan, the aggregate number of Common Shares actually issuedU.S. dollars, except per share amounts or transferred by the Company upon the exercise of incentive stock options will not exceed 20,451,895 Common Shares.as otherwise stated) (unaudited)
The Board has the exclusive power over the granting, amendment, administration or settlementCompany granted 3,700,000 options at an average fair value price of any award.
Stock$C0.25 per option, transactions are summarized as follows:based on Black-Scholes models with an average risk-free rate of 0.26%, average stock price volatility of 54.07%, and a three-year expected option life.
Number of Options | Weighted Average Exercise Price (C$) | |||||||
Balance, June 30, 2017 | 16,605,000 | $ | 0.73 | |||||
Issued | 3,925,000 | 0.47 | ||||||
Exercised | (10,091 | ) | 0.62 | |||||
Cancelled/expired | (4,470,000 | ) | 0.75 | |||||
Balance, December 31, 2017 | 16,049,909 | $ | 0.66 |
The following table summarizes information about stock options to purchase Common Shares (“Options”) outstanding at December 31, 2017:2020:
Exercise price (C$) | Expiry date | Number outstanding | Aggregate Intrinsic Value (C$000s) | Number exercisable | Aggregate Intrinsic Value (C$000s) | |||||||||||||||
$ | 0.47 | November 9, 2022 | 3,925,000 | $ | 1,060 | 3,925,000 | $ | 1,060 | ||||||||||||
$ | 0.62 | January 19, 2021 | 5,264,909 | 632 | 5,264,909 | 632 | ||||||||||||||
$ | 0.76 | March 6, 2022 | 5,650,000 | — | 2,825,000 | — | ||||||||||||||
$ | 0.94 | April 28, 2018 | 400,000 | — | 400,000 | — | ||||||||||||||
$ | 0.94 | April 28, 2019 | 100,000 | — | 100,000 | — | ||||||||||||||
$ | 0.94 | July 21, 2021 | 710,000 | — | 532,500 | — | ||||||||||||||
Balance December 31, 2017 | 16,049,909 | $ | 1,692 | 13,047,409 | $ | 1,692 |
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
December 31, 2017
(expressed in thousands of U.S. dollars, unless otherwise stated) (unaudited)
Exercise Price (C$) | Expiry Date | Number Outstanding | Aggregate Intrinsic Value | Number Exercisable | Aggregate Intrinsic Value | |||||||||||||||
$ | 0.62 | January 19, 2021 | 4,684,909 | C$ | 890 | 4,684,909 | C$ | 890 | ||||||||||||
$ | 0.94 | July 21, 2021 | 540,000 | — | 540,000 | — | ||||||||||||||
$ | 0.76 | March 6, 2022 | 5,400,000 | 270 | 5,400,000 | 270 | ||||||||||||||
$ | 0.47 | November 9, 2022 | 3,455,000 | 1,175 | 3,455,000 | 1,175 | ||||||||||||||
$ | 0.84 | September 18, 2023 | 1,300,000 | — | 1,300,000 | — | ||||||||||||||
$ | 0.54 | November 15, 2023 | 4,445,000 | 1,200 | 4,445,000 | 1,200 | ||||||||||||||
$ | 0.75 | December 14, 2023 | 1,850,000 | 111 | 1,850,000 | 111 | ||||||||||||||
$ | 0.75 | December 16, 2023 | 550,000 | 33 | 550,000 | 33 | ||||||||||||||
22,224,909 | C$ | 3,679 | 22,224,909 | C$ | 3,679 |
The aggregate intrinsic value in the preceding table represents the total intrinsic value, based on the Company’s closing Common Share price of C$0.740.81 as of December 31, 2017,2020, that would have been received by the optionOption holders had all optionOption holders exercised their optionsOptions as of that date. The total number of in-the-money optionsOptions vested and exercisable as of December 31, 20172020, was 9,189,909. The total intrinsic value of options exercised during the six months ended December 31, 2017 was nil.
17,239,909. As of December 31, 2017,2020, there was $247$0 of unrecognized compensation cost related to unvested share-based compensation arrangements granted under the 2016 Incentive Stock Option Plan. The cost is expected to be recognized over a remaining weighted average period of approximately 0.7 years.plans.
Warrants |
Warrants | Weighted Average Exercise Price | ||||||||
Balance June 30, 2020 | 12,376,451 | C$ | 0.74 | ||||||
Granted | 500,000 | 0.80 | |||||||
Exercised | (2,777,422 | ) | 0.71 | ||||||
Expired | (388,535 | ) | 0.75 | ||||||
Balance, December 31, 2020 | 9,710,494 | C$ | 0.75 |
Warrant transactions are summarized as follows:
Warrants | Weighted average exercise price (C$) | |||||||
Balance June 30, 2017 | 20,609,086 | $ | 0.79 | |||||
Granted | 4,362,991 | 0. 75 | ||||||
Balance, December 31, 2017 | 24,972,077 | $ | 0. 78 |
As discussed above under Note 6, the Company granted 1,207,929 Warrants to Lind in connection with the funding of the Convertible Security Increase. As discussed above under Note 7a, the Company granted 2,962,500 Warrants and 192,562 Broker Warrants in conjunction with the July 2017 Private Placement.
At December 31, 2017,2020, the Company hashad outstanding exercisable Warrants, as follows:
Number | Exercise Price (C$) | Expiry Date | ||||||
355,132 | 0.54 | December 6, 2020 | ||||||
308,901 | 0.62 | October 31, 2020 | ||||||
283,413 | 0.66 | September 28, 2020 | ||||||
3,125,000 | 0.72 | December 22, 2018 | ||||||
260,483 | 0.73 | August 15, 2020 | ||||||
9,150,285 | 0.75 | January 19, 2019 | ||||||
3,155,062 | 0.79 | July 26, 2021 | ||||||
3,860,800 | 0.85 | February 14, 2020 | ||||||
3,043,024 | 0.85 | February 21, 2020 | ||||||
539,307 | 0.85 | February 28, 2020 | ||||||
890,670 | 0.90 | March 31, 2020 | ||||||
24,972,077 |
Number | Exercise Price | Expiry Date | ||||||
1,546,882 | C$ | 0.72 | January 30, 2021 | |||||
529,344 | C$ | 0.70 | February 5, 2021 | |||||
541,435 | C$ | 0.69 | February 7, 2021 | |||||
1,058,872 | C$ | 0.72 | April 5, 2021 | |||||
833,330 | C$ | 0.72 | April 29, 2021 | |||||
645,250 | C$ | 0.72 | May 9, 2021 | |||||
1,035,319 | C$ | 0.77 | July 9, 2021 | |||||
3,020,062 | C$ | 0.79 | July 26, 2021 | |||||
500,000 | C$ | 0.80 | December 18, 2022 | |||||
9,710,494 |
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
December 31, 2020
(expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited)
8. | RELATED PARTY TRANSACTIONS AND BALANCES |
The Company has a loan with Mark Smith, President, Chief Executive Officer (“CEO”) and Executive Chairman of NioCorp (the “Original Smith Loan”), that bears an interest rate of 10%, is secured by the Company’s assets pursuant to a concurrently executed general security agreement (the “General Security Agreement”), and is subject to both a 2.5% establishment fee and 2.5% prepayment fee. TheAs of December 31, 2020, the principal amount outstanding under the Original Smith Loan is $1,000, and is due on June 17, 2018.
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
December 31, 2017
(expressed in thousands of U.S. dollars, unless otherwise stated) (unaudited)was $1,000.
The Company also has a non-revolving credit facility agreement (the “Credit Facility”Agreement”) in the amountwith a limit of $2,000$3,500 with Mr. Smith. The Credit FacilityAgreement bears an interest rate of 10% and drawdowns from the Credit FacilityAgreement are subject to a 2.5% establishment fee. Amounts outstanding under the Credit FacilityAgreement are secured by all of the Company’s assets pursuant to the General Security Agreement. The Credit FacilityAgreement contains financial and non-financial covenants customary for a facility of its size and nature and is due on June 16, 2018. During the quarter ended December 31, 2017, Mr. Smith advanced an additional $180 to the Company under the Credit Facility.nature. As of December 31, 2017,2020, the principal amount outstanding under the Credit Facility is $355Agreement was $2,818.
On December 14, 2020, the maturity dates for the Original Smith Loan and accountsthe Credit Agreement were extended from December 15, 2020 to December 15, 2021.
Accounts payable and accrued liabilities includedas of December 31, 2020, include accrued interest payableof $667 and loan establishmentorigination fees of $58 payable to Mr. Smith of $176.
On June 20, 2016,under the Company announced a joint development agreement (the “Development Agreement”) with IBC Advanced Alloys Corp. (“IBC”) to investigateOriginal Smith Loan and develop applications for scandium-containing alloys for multiple downstream markets. In addition to his management duties at NioCorp, Mark Smith is also the Chairman of the IBC Board of Directors. Under the terms of the Development Agreement, each party bears its own costs incurred in development efforts. During the quarter ended December 31, 2017 the company supplied IBC with a small quantity of Scandium Trioxide which was used to manufacture several aluminum-scandium alloy ingots. The ingots, representing a range of scandium content, will undergo chemical analysis and other metallurgical testing to confirm the microstructure and performance of the alloys.Credit Agreement.
9. | Exploration Expenditures |
For the three months ended December 31, | For the six months ended December 31, | For the Three Months Ended December 31, | For the Six Months Ended December 31, | |||||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||
Technical studies and engineering | $ | 59 | $ | 1,551 | $ | 454 | $ | 1,988 | $ | — | $ | 6 | $ | — | $ | 23 | ||||||||||||||||
Field management and other | 132 | 399 | 342 | 633 | 148 | 405 | 330 | 570 | ||||||||||||||||||||||||
Metallurgical development | 89 | 419 | 172 | 1,691 | 41 | 43 | 84 | 84 | ||||||||||||||||||||||||
Geologists and field staff | 23 | 28 | 48 | 55 | ||||||||||||||||||||||||||||
Total | $ | 303 | $ | 2,397 | $ | 1,016 | $ | 4,367 | $ | 189 | $ | 454 | $ | 414 | $ | 677 |
10. |
On December 22, 2017, President Trump signedEffective August 1, 2020, the Company entered into lawa three-year corporate office lease extension and recognized the Tax Cutscorresponding right of use asset and Jobs Act (the “Act”), which took effect on January 1, 2018. Some notable provisions of the Act include a reduction of the corporate income tax rate from 35% to 21%, 100% bonus depreciation for certain capital expenditures, and a change from a worldwide systemlease liability associated with deferral to a territorial tax system, which includes a one-time toll charge on certain undistributed earnings of non-U.S. subsidiaries.this lease extension, along with two existing nominal leases. The Company does not expect any material impactshas applied a discount rate of this new legislation on its consolidated financial statements.16%.
These three operating leases have an average remaining life of 2.2 years as of December 31, 2020. The Company incurred lease costs of $44 and $53 for the six months ended December 31, 2020 and 2019, respectively.
The maturities of lease liabilities are as follows at December 31, 2020:
Fiscal Year Lease Maturities | ||||
2021 | $ | 56 | ||
2022 | 110 | |||
2023 and thereafter | 116 | |||
Total lease payments | 282 | |||
Less portion of payments representing interest | (49 | ) | ||
Present value of lease payments | $ | 233 |
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
December 31, 2020
(expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited)
11. | Fair Value Measurements |
The Company measures the fair value of financial assets and liabilities based on US GAAP guidance which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.
The Company classifies financial assets and liabilities as held-for-trading, available-for-sale, held-to-maturity, loans and receivables, or other financial liabilities depending on their nature. Financial assets and financial liabilities are recognized at fair value on their initial recognition.
Financial assets and liabilities classified as held-for-trading are measured at fair value, with gains and losses recognized in net income. Financial assets classified as held-to-maturity, loans and receivables, and financial liabilities other than those classified as held-for-trading are measured at amortized cost, using the effective interest method of amortization. Financial assets classified as available-for-sale are measured at fair value, with unrealized gains and losses being recognized in income.
|
Financial instruments including receivables, accounts payable and accrued liabilities, and related party loans are carried at amortized cost, which Managementmanagement believes approximates fair value due to the short-term nature of these instruments.
The following table presentstables present information about the assets and liabilities that are measured at fair value on a recurring basis as of December 31, 20172020 and June 30, 2017,2020, respectively, and indicatesindicate 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:instrument.
As of December 31, 2017 | As of December 31, 2020 | |||||||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 80 | $ | 80 | $ | — | $ | — | $ | 133 | $ | 133 | $ | — | $ | — | ||||||||||||||||
Available-for-sale securities | 17 | 17 | — | — | ||||||||||||||||||||||||||||
Equity securities | 9 | 9 | — | — | ||||||||||||||||||||||||||||
Total | $ | 97 | $ | 97 | $ | — | $ | — | $ | 142 | $ | 142 | $ | — | $ | — | ||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Convertible debt | $ | 1,609 | $ | — | $ | — | $ | 1,609 | ||||||||||||||||||||||||
Derivative liability, convertible debt | 82 | — | — | 82 | $ | 62 | $ | — | $ | — | $ | 62 | ||||||||||||||||||||
Total | $ | 1,691 | $ | — | $ | — | $ | 1,691 | $ | 62 | $ | — | $ | — | $ | 62 |
As of June 30, 2017 | As of June 30, 2020 | |||||||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 238 | $ | 238 | $ | — | $ | — | $ | 307 | $ | 307 | $ | — | $ | — | ||||||||||||||||
Restricted cash | 265 | 265 | — | — | ||||||||||||||||||||||||||||
Available-for-sale securities | 23 | 23 | — | — | ||||||||||||||||||||||||||||
Equity securities | 7 | 7 | — | — | ||||||||||||||||||||||||||||
Total | $ | 526 | $ | 526 | $ | — | $ | — | $ | 314 | $ | 314 | $ | — | $ | — | ||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Convertible debt | $ | 3,465 | $ | — | $ | — | $ | 3,465 | $ | 38 | $ | — | $ | — | $ | 38 | ||||||||||||||||
Derivative liability, convertible debt | 82 | — | — | 82 | 33 | — | — | 33 | ||||||||||||||||||||||||
Total | $ | 3,547 | $ | — | $ | — | $ | 3,547 | $ | 71 | $ | — | $ | — | $ | 71 |
NioCorp Developments Ltd.
Notes to the Condensed Consolidated Financial Statements
December 31, 2020
(expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited)
The Company measures the fair market value of the Level 3 components using the Black Scholes model and discounted cash flows, as appropriate. These models take into account Management’smanagement’s best estimate of the conversion price of the stock, an estimate of the expected time to conversion, an estimate of the stock’s volatility, and the risk-free rate of return expected for an instrument with a term equal to the duration of the convertible debt.
The following table sets forth a reconciliation of changes in the fair value of the Company’s convertible debt components classified as Level 3 in the fair value hierarchy:
Balance, June 30, 2017 | $ | 3,547 | ||
Additional debt drawdown | 1,000 | |||
Conversions to equity | (3,030 | ) | ||
Realized and unrealized gains | 174 | |||
Balance, December 31, 2017 | $ | 1,691 |
|
Balance, June 30, 2020 | $ | 71 | ||
Additions to convertible debt | — | |||
Conversions to equity | (38 | ) | ||
Realized and unrealized losses | 29 | |||
Balance, December 31, 2020 | $ | 62 |
12. Subsequent events
Pursuant to notice provided by Lind toAs discussed in Note 5, the CompanyNordmin Note was initially recorded at fair value, which represents a nonrecurring fair value measurement using a Level 3 input. The significant unobservable valuation inputs for the Nordmin Note includes an expected return of its election to advance an additional $2,500 in funding under the Initial Convertible Security and the Lind Agreement (the “Second Tranche Increase”), Lind funded the full $2,500 Second Tranche Increase as of February 7, 2018. Upon payment of the full $2,500 in funding by Lind to the Company, the face amount of the Initial Convertible Security was increased by $3,000 ($2,500 in additional funding and $500 in implied interest amount)7%. In connection with the funding, the Company issued Common Share purchase warrants (the ‘Second Tranche Warrants”) to Lind as follows:
Funding Date | Face Value1 | Warrants Issued | Issue Price2 | Warrant Expiry Date | |
January 30, 2018 | $ | 1,800 | 1,546,882 | C$0.72 | January 30, 2021 |
February 5, 2018 | 600 | 529,344 | C$0.70 | February 5, 2021 | |
February 7, 2018 | 600 | 541,435 | C$0.69 | February 7, 2021 |
In addition, the terms of the Lind Agreement, as amended, provide for additional funding of up to $2,000 as part of the second tranche, subject to certain conditions, for total gross proceeds to the Company of up to $4,500.
In January 2018, Mark Smith advanced an additional $125 in funding under the existing Credit Facility with the Company. This funding is subject to the same terms and conditions as the prior drawdowns under the Credit Facility and will be used for general corporate purposes.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our unaudited condensed interim consolidated financial statements as of, and for the three and six months ended December 31, 20172020, and the related notes thereto, which have been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”). This discussion and analysis contains forward-looking statements and forward-looking information that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements and information as a result of many factors, including, but not limited to, those set forth elsewhere in this Quarterly Report on Form 10-Q. See “Note Regarding Forward-Looking Statements” below.
All currency amounts are stated in thousands of U.S. dollars unless noted otherwise.
As used in this report, unless the context otherwise indicates, references to “we,” “our,” the “Company,” “NioCorp,” and “us” refer to NioCorp Developments Ltd. and its subsidiaries, collectively.
Note Regarding Forward Looking Statements
This Quarterly Report on Form 10-Q and the exhibits attached hereto contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and “forward-looking information” within the meaning of applicable Canadian securities legislation (collectively, “forward-looking statements”). Such forward-looking statements concern our anticipated results and developments in the operations of the Company in future periods, planned exploration activities, the adequacy of the Company’s financial resources, and other events or conditions that may occur in the future. Forward-looking statements are frequently, but not always, identified by words such as “expects,” “anticipates,” “believes,” “intends,” “estimates,” “potential,” “possible,” and similar expressions, or statements that events, conditions, or results “will,” “may,” “could,” or “should” (or the negative and grammatical variations of any of these terms) occur or be achieved. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, or future events or performance (often, but not always, using words or phrases such as “expects” or “does not expect,” “is expected,” “anticipates” or “does not anticipate,” “plans,” “estimates,” or “intends,” or stating that certain actions, events, or results “may,” “could,” “would,” “might,” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Such forward-looking statements reflect the Company’s current views with respect to future events and are subject to certain known and unknown risks, uncertainties, and assumptions. Many factors could cause actual results, performance, or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including, among others, risks related to the following:
● | risks related to our ability to operate as a going concern; |
● | risks related to our requirement of significant additional capital; |
● | risks related to our limited operating history; |
● | risks related to changes in economic valuations of the Elk Creek Project, such as net present value calculations, changes or disruptions in the securities markets; |
● | risks related to our history of losses; |
● | risks related to cost increases for our exploration and, if warranted, development projects; |
● | risks related to feasibility study results; |
● | risks related to mineral exploration and production activities; |
● | risks related to our lack of mineral production from our properties; |
● | risks related to the results of our metallurgical testing; |
● | risks related to the price volatility of commodities; |
● | risks related to estimates of mineral resources and reserves; |
● | risks related to changes in mineral resource and reserve estimates; |
● | risks related to differences in |
● | risks related to our exploration activities being unsuccessful; |
● | risks related to our ability to obtain permits and licenses for production; |
● | risks related to government and environmental regulations that may increase our costs of doing business or restrict our operations; |
● | risks related to proposed legislation that may significantly affect the mining industry; |
● | risks related to land reclamation requirements; |
● | risks related to competition in the mining industry; |
● | risks related to the difficulties of |
● | risks related to equipment and supply shortages; |
● | risks related to current and future joint ventures and partnerships; |
● | risks related to our ability to attract qualified management; |
● | risks related to the ability to enforce judgment against certain of our Directors; |
● | risks related to claims on the title to our properties; |
● | risks related to surface access on our properties; |
● | risks related to potential future litigation; |
● | risks related to our lack of insurance covering all our operations; |
● | risks related to the need for resilience in the face of potential impacts from climate change; |
● | risks related to a disruption in, or failure of, our information technology (“IT”) systems, including those related to cybersecurity; |
● | risks related to covenants contained in agreements with our secured creditors that may affect our assets; |
● | risks related to the extent to which our level of indebtedness may impair our ability to obtain additional financing; |
● | risks related to our status as a “passive foreign investment company” under the |
● | risks related to |
● | risks related to our |
● | Risks related to the effects of the COVID-19 pandemic on our business plans, financial condition and liquidity. |
Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. This list is not exhaustive of the factors that may affect any of the Company’s forward-looking statements. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties, and other factors, including without limitation those discussed under the heading “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended June 30, 2017,2020, as well as other factors described elsewhere in this report and the Company’s other reports filed with the SEC.Securities and Exchange Commission (“SEC”).
The Company’s forward-looking statements contained in this Quarterly Report on Form 10-Q are based on the beliefs, expectations, and opinions of Managementmanagement as of the date of this report. The Company does not assume any obligation to update forward-looking statements if circumstances or Management’smanagement’s beliefs, expectations, or opinions should change, except as required by law. For the reasons set forth above, investors should not attribute undue certainty to, or place undue reliance on, forward-looking statements.
National Instrument 43-101 Compliance
Scott Honan, M.Sc., SME-RM, a qualified person as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”), has supervised the preparation of the scientific and technical information that forms the basis for the Elk Creek Project disclosure in this Quarterly Report on Form 10-Q and has approved the disclosure in this Quarterly Report on Form 10-Q related thereto. Mr. Honan is not independent of the Company, as he is the Vice President, Business Development. For additionalChief Operating Officer. Additional information on the updated Feasibility Study for the Elk Creek Project including information relating to exploration, data verification, the mineral resource estimates and the mineral reserve estimates, see the Revised(the “2019 Feasibility Study”) is available in our NI 43-101 Technical Report, (the “Revised Elk Creek Feasibility Study”), dated December 15, 2017,issued May 29, 2019, which is available under NioCorp’s profile on the Canadian Securities Administrators website at www.sedar.com (“SEDAR”).and on our website at www.niocorp.com/wp-content/uploads/180001_FINAL_43-101_FS_NioCorp_AS_FILED.pdf.
Company Overview
NioCorp is developing the Elk Creek Project, located in southeast Nebraska. The Elk Creek Project is an advanced Niobium (Nb)(“Nb”)/Scandium (Sc)(“Sc”)/Titanium (Ti)(“Ti”) exploration project. Niobium is used to produce various superalloys that are extensively used in high performance aircraft and jet turbines. It also is used in High-Strength, Low-Alloy (“HSLA”) steel, a stronger steel used in automotive,automobiles, bridges, structural systems, buildings, pipelines, and other applications that generally increases strength and/or reduces the weight, of those applications, which can result in environmental benefits, including reduced fuel consumption and material usage and fewer air emissions. Scandium can be combined with aluminum to make super-high-performancehigh-performance alloys with increased strength and improved corrosion resistance. Scandium also is a critical component of advanced solid oxide fuel cells, an environmentally preferred technology for high-reliability, distributed electricity generation. Titanium is a component of various superalloys and other applications that are used for aerospace applications, weapons systems, protective armor, medical implants and many others. It also is used in pigments for paper, paint, and plastics.
Our primary business strategy is to advance our Elk Creek Project to commercial production. We are focused on obtaining additional funds to carry out our near-term planned work programs associated with securing the project financing necessary to complete mine development, construction, commissioning, and constructionoperation of the Elk Creek Project. With the recent filing of the Revised Elk Creek Feasibility Study (see “Elk Creek Project Update,” below), we are currently working to obtain the financing necessary to advance the Elk Creek Project to construction and operations, as well as conducting permitting and other related activities at and for the Elk Creek Project.
Emerging Growth Company Status
We qualify as an “emerging growth company” as defined in Section 101 of the Jumpstart our Business Startups Act (“JOBS Act”) as we do not have more than $1.07 billion in annual gross revenue and did not have such amount as of June 30, 2017,2020, this being the last day of our most recently completed fiscal year.
We may lose our status as an emerging growth company on the last day of our fiscal year during which (i) our annual gross revenue exceeds $1.07 billion or (ii) we issue more than $1.07 billion in non-convertible debt in a three-year period. We will lose our status as an emerging growth company if at any time we are deemed to be a large accelerated filer, as defined in Rule 405 under the Exchange Act. We will lose our status as an emerging growth company on the last day of our fiscal year following the fifth anniversary of the date of our first sale of Common Shares pursuant to an effective registration statement.
As an emerging growth company under the JOBS Act, we have elected to opt out of the extended transition period for complying with new or revised standards pursuant to Section 107(b) of the JOBS Act. The election is irrevocable.
As an emerging growth company, we are exempt from Section 404(b) of the Sarbanes-Oxley Act of 2002 and Section 14A(a) and (b) of the Exchange Act. Such sections are described below:
● | Section 404(b) of the Sarbanes-Oxley Act of 2002 requires a public company’s auditor to attest to, and report on, |
● | Sections 14A(a) and (b) of the Exchange Act, implemented by Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) |
As long as we qualify as an emerging growth company, we will not be required to comply with the requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 and Section 14A (a) and (b) of the Exchange Act.
COVID-19
In December 2019, COVID-19 was identified in Wuhan, China, and has since spread to other countries, including the United States. In March 2020, the World Health Organization characterized COVID-19 as a pandemic. Several countries, including the United States, continue to take steps to restrict travel, temporarily close businesses and issue quarantine orders, and it remains unclear how long currently enacted measures will remain in place. As a result of the COVID-19 pandemic, the Company continues to curtail corporate travel and project site visitations. Additionally, the Company is following, and will continue to follow, social distancing, health and safety protocol, business-related social gathering restrictions, and other similar guidelines promulgated by both Colorado and Nebraska governmental officials.
On April 17, 2020, NioCorp’s subsidiary, Elk Creek Resources Corp., received a U.S. Small Business Administration Loan (the “SBA Loan”) from American National Bank, pursuant to the Paycheck Protection Program (the “PPP”) established under the Coronavirus Aid, Relief, and Economic Security Act, commonly referred to as the CARES Act, in the amount of $196. Under the terms of the SBA Loan, the Company may be eligible for full or partial loan forgiveness. The unforgiven portion of the SBA Loan is payable over two years at an annual interest rate of 1%, with a deferral of payments for the first six months. The Company used the proceeds for purposes consistent with the PPP.
On October 27, 2020, the Company applied for loan forgiveness of $186, comprising the initial SBA Loan balance less $10 representing an Economic Injury Disaster Loan Advance grant (the “EIDL advance”) received by the Company in April 2020. On November 18, 2020, the Company was notified that the $186 loan forgiveness request had been approved.
On December 21, 2020, the U.S. Congress passed the Consolidated Appropriations Act, 2021 (the “Act”), which provided additional COVID-19 relief legislation as well as government funding and other bills. The Act removes the previous requirement that PPP borrowers deduct the amount of any EIDL advance from their PPP forgiveness amount. The Small Business Administration is currently developing the guidance and procedures associated with this change in statute, and the Company will apply for this additional forgiveness once the process is completed.
The COVID-19 pandemic continues to create uncertainty with regards to overall project funding timelines and has heightened the risk that we may be unable to secure sufficient additional capital, including but not limited to equity and debt offerings, to fund future expenditures or to maintain our liquidity. It is also possible that the COVID-19 pandemic could further adversely affect our business plans, results of operations, financial condition or liquidity in the future. The impact of the COVID-19 pandemic is fluid and continues to evolve, and therefore, we cannot currently predict the extent to which our business plans, results of operations, financial condition or liquidity will ultimately be impacted.
Recent Corporate Events
Long-term financing efforts continued duringOn December 14, 2020, the quarter ended December 31, 2017, with principal activities focused on outreachCompany announced the appointment of Fernanda Fenga to its Board of Directors. A former senior executive at the world’s largest producer of niobium, Companhia Brasileira Metalúrgica e Mineração (“CBMM”), Ms. Fenga currently serves as a senior advisor to mining companies in Brazil and discussions with several potential sources of project funding, as well as completingin the technical due diligence review (the “technical review”)U.S. Previously, she was Legal and Compliance Director at Somos Educação, Brazil’s largest basic education company and one of the Company’s recently released Revised Elk Creek Feasibility Study by RPM Global USA, Inc. on behalf of a potential debt financing syndicate. The technical review is projected to be completedlargest education groups in the quarter ending March 31, 2018. world. In addition, Ms. Fenga worked for more than nine years at CBMM, where she served as Corporate Superintendent. In that position, she managed the company’s legal, compliance, investor relations, public affairs, and corporate risk management departments. She also played an integral role in some of CBMM’s largest commercial transactions, two of which were valued at more than U.S.$1.9 billion each.
On December 18, 2020, the Company issued a convertible note in the principal amount of approximately $1,872 (the “Nordmin Note”) and 500,000 warrants (the “Nordmin Warrants”) to Nordmin Engineering Ltd. (“Nordmin”) pursuant to a convertible note and warrant subscription agreement (the “Nordmin Agreement”) under which Nordmin agreed to subscribe for and purchase the Nordmin Note and Nordmin Warrants for a subscription price of approximately $1,804, which amount was set off against the amount owing to Nordmin by NioCorp for past services.
The technical reviewNordmin Note will providemature on December 18, 2021 with an independent analysisimplied interest rate of 5% per annum and, opinionsubject to certain terms and conditions, is convertible into up to 4,500,000 common shares of the Company (“Common Shares”) at a conversion price of 92% of the five-day volume-weighted average price Common Shares on the technical contentToronto Stock Exchange at the time of conversion. The Nordmin Note contains restrictions on how much of the Revised Elk Creek Feasibility Study,principal amount may be converted in any 30-day period. The Nordmin Note also provides the Company with the option to prepay, in whole or in part, any outstanding principal amount thereunder, upon three days’ notice to Nordmin. In addition, Nordmin is entitled to accelerate the maturity of the Nordmin Note and require the Company to prepay the outstanding principal amount upon the occurrence of an event of default and other designated events described in the Nordmin Note.
Subject to certain terms and conditions, each Nordmin Warrant is exercisable into one Common Share at a price of C$0.80 per share until December 18, 2022. The Nordmin Note and the Nordmin Warrants are, and the Common Shares underlying the Nordmin Warrants, will be, providedsubject to financial institutions expected to form debt and/resale restrictions and are or equity syndicates that will help financebe, as applicable, “restricted securities” within the Elk Creek Project.
Upon completionmeaning of Rule 144 under the technical review, the following steps remain in our financing plan:United States Securities Act of 1933.
Pursuant to notice provided by Lind to the Company of its election to advance an additional $2,500 in funding under the Initial Convertible Security and the Lind Agreement (the “Second Tranche Increase”), Lind funded the full $2,500 Second Tranche Increase as of February 7, 2018. In connection with the funding, the Company issued Common Share purchase warrants (the ‘Second Tranche Warrants”) to Lind, as follows:
Funding Date | Face Value1 | Warrants Issued | Issue Price2 | Warrant Expiry Date | |
January 30, 2018 | $ | 1,800 | 1,546,882 | C$0.72 | January 30, 2021 |
February 5, 2018 | 600 | 529,344 | C$0.70 | February 5, 2021 |
1 Includes implied interest.
2 The price to convert one warrant into one Common Share.
In addition, the terms of the LindNordmin Agreement, as amended, provide for additional fundingon December 18, 2020, the Company issued 836,551 Common Shares to Nordmin upon an initial conversion of up to $2,000 as part$450 in principal amount of the second tranche, subject to certain conditions, for total gross proceeds to the CompanyNordmin Note at a conversion price of up to $4,500.C$0.684 per share.
Elk Creek Project Update
On June 30, 2017, weSeptember 29, 2020, the Company announced the results ofthat advances by its technical team have uncovered a potential alternative process for extracting niobium from the Elk Creek Project. If further proven to be technologically and economically feasible at scale for the Elk Creek Project, and if incorporated by NioCorp into the Elk Creek Project’s design and construction, the new approach could result in lower up-front capital and operating costs for the Elk Creek Project.
A series of metallurgical tests completed for NioCorp by L3 Process Development (“L3”) of West Jordan, Utah, has established carbonation as a potential alternative metallurgical process for the extraction of niobium from ore that NioCorp expects to mine from the Elk Creek Project site, subject to receipt of necessary funding. Carbonation is a relatively clean, environmentally friendly, and sustainable hydrometallurgical process that can potentially be employed to use and recycle carbon dioxide to extract niobium and other elements from ore in a manner similar to extractions with acids such as hydrochloric or sulphuric acid.
The carbonation test work to date has demonstrated the ability at a small scale to extract niobium from the same Elk Creek ore sample used for metallurgical testing for the Company’s 2019 Feasibility Study without co-extraction of titanium. L3 and the related technical report was completedCompany intend to conduct additional carbonation testing on a larger scale to optimize carbonation operating conditions, confirm reaction kinetics, evaluate total potential extraction for niobium and filed in Canada on SEDAR on August 10, 2017 (the “August 2017 Feasibility Study”). In connectionother elements and complete additional mass balances, as funds become available. NioCorp has partnered with L3 and a review by the Ontario Securities Commission (“OSC”), on December 15, 2017, the Company filed the Revised Elk Creek Feasibility Study. The Revised Elk Creek Feasibility Study, which is availableCanadian testing facility to apply for download on SEDAR andCanadian government funding to complete additional development work on the Company’s website at www.niocorp.com, contains no changes to any previously reported numbers or forecasted economic returnscarbonation process.
The development of the Elk Creek Project from those contained in the August 2017 Feasibility Study.
At the OSC’s request, the Revised Elk Creek Feasibility Study provides (1)will require significant additional information in Section 19.1.3 on the growth forecast for global scandium markets provided by an independent scandium market expert (OnG Commodities LLCcapital above what NioCorp has raised to date, and Dr. Andrew Matheson) and relied upon by the Company in its August 2017 Feasibility Study; (2) an analysis in Section 22.4 showing Net Present Value and Internal Rate of Return sensitivities ofanticipates that any significant work on the Elk Creek Project at +/- 30% of the August 2017 Feasibility Study’s assumed product pricing, capital expenditures,pursuant to agreements that may be reached with key contractors will be contingent on obtaining sufficient project financing, if and operating costs (vs. +/- 20% originally presented in the August 2017 Feasibility Study); (3) disclosure in Section 3 of the reliance on OnG Commodities LLC and Dr. Matheson; (4) the removal in Section 24 of certain disclosure regarding the Company’s relationship with Dr. Matheson; and (5) inclusion in Section 25 of certain risk factors.when available.
The Elk Creek Project is planned as an underground mining operation using a long-hole stoping mining method and paste backfill, operating with a processing rate of 2,760 tonnes per day. Expected total production over the 32-year mine life includes 143,824 tonnes of payable niobium, 3,237 tonnes of scandium trioxide (Sc2O3), and 359,128 tonnes of titanium dioxide (TiO2). Estimated up-front direct capital costs are $705 million, in addition to indirect costs of $189 million, pre-production capital costs of $85 million, an overall contingency of $109 million, and pre-production net revenue credit of $79 million.Other Activities
WeOur long-term financing efforts continued to advance Elk Creek Project-related work during the quarter. Primary activities included:
quarter ended December 31, 2020. However, as noted above under “COVID-19,” the COVID-19 pandemic has created uncertainty and continues to impact processes related to the Company’s efforts to obtain project financing. As funds become available through the Company’s fundraising efforts, we expect to undertake the following activities:
● |
● |
● |
● | Initiation and completion of the final detailed engineering for surface project facilities; |
● | Construction of natural gas and electrical infrastructure under existing agreements to serve the Elk Creek Project site; |
● | Completion of water supply agreements and related infrastructure to deliver fresh water to the project site; |
● | Initiation of revised mine groundwater investigation and control activities; and |
● |
Financial and Operating Results
The Company continues to expense all expenditures when incurred, except for equipment, which is capitalized. The Company has no revenues from mining operations. Operating expenses incurred related primarily to performing exploration activities, as well as the activities necessary to support corporate and shareholder duties and are detailed in the following table.
For the three months ended December 31, | For the six months ended December 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Operating expenses: | ||||||||||||||||
Employee-related costs | $ | 751 | $ | 459 | $ | 1,399 | $ | 962 | ||||||||
Professional fees | 118 | 279 | 393 | 612 | ||||||||||||
Exploration expenditures | 303 | 2,397 | 1,016 | 4,367 | ||||||||||||
Other operating expenses | 391 | 215 | 687 | 389 | ||||||||||||
Total operating expenses | 1,563 | 3,350 | 3,495 | 6,330 | ||||||||||||
Change in financial instrument fair value | 274 | (39 | ) | 297 | (335 | ) | ||||||||||
Foreign exchange (gain) loss | 36 | 160 | (201 | ) | 193 | |||||||||||
Interest expense | 91 | 71 | 175 | 140 | ||||||||||||
Gain (loss) on available for sale securities | (4 | ) | 5 | 7 | (6 | ) | ||||||||||
Income tax expense | — | — | — | — | ||||||||||||
Net Loss | $ | 1,960 | $ | 3,547 | $ | 3,773 | $ | 6,322 |
For the Three Months Ended December 31, | For the Six Months Ended December 31, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Operating expenses | ||||||||||||||||
Employee-related costs | $ | 686 | $ | 345 | $ | 1,005 | $ | 699 | ||||||||
Professional fees | 85 | 67 | 193 | 185 | ||||||||||||
Exploration expenditures | 189 | 454 | 414 | 677 | ||||||||||||
Other operating expenses | 253 | 135 | 664 | 332 | ||||||||||||
Total operating expenses | 1,213 | 1,001 | 2,276 | 1,893 | ||||||||||||
Other income | (186 | ) | — | (186 | ) | — | ||||||||||
Loss on extinguishment | 163 | — | 163 | — | ||||||||||||
Change in financial instrument fair value | 62 | 81 | 28 | 88 | ||||||||||||
Foreign exchange gain | (302 | ) | (79 | ) | (403 | ) | (36 | ) | ||||||||
Interest expense | 131 | 73 | 258 | 133 | ||||||||||||
(Gain) loss on equity securities | — | — | (2 | ) | 3 | |||||||||||
Income tax expense | — | — | — | — | ||||||||||||
Net Loss | $ | 1,081 | $ | 1,076 | $ | 2,134 | $ | 2,081 |
Six months ended December 31, 20172020 compared to six months ended December 31, 20162019
Significant items affecting operating expenses are noted below:
Employee relatedEmployee-related costsincreased in 2020 as compared to 2019, primarily due to increased share-based compensation costs, reflectingwhich reflect the timing of option issuances2020 Option grants, which were fully vested and expensed on the corresponding vesting periods, as well as the number of options granted and associated fair value calculations.
Professional feesinclude legal and accounting services. Overall, these fees decreased, reflecting the timing of registration statements filed with the SEC and ongoing compliance efforts.grant date.
Exploration expendituresdecreased $3.4 million, reflectingin 2020 as compared to 2019, primarily due to the timingcosts incurred in 2019 related to advancing work to obtain an air construction permit from the State of expenditures at the Elk Creek Project as discussed above under “Elk Creek Project Update.” 2017Nebraska. 2020 expenditures primarily related to the final wrap-up and issuance of the August 2017 Feasibility Study and the Revised Elk Creek Feasibility Study and ongoing permitting andpersonnel costs, as general project advancement activities, while 2016 costs were primarily directed towards engineering and metallurgical bench and pilot plant test work in support of our continuing feasibility study work.activities.
Other operating expensesinclude investor relations, general office expenditures, equity offering and proxy expenditures, board-related expenditures and other miscellaneous costs. These costs increased in 2020 as compared to 2019 primarily due to 2020 Option grants, which were fully vested and expensed on the timing of option issuances and the corresponding vesting periods, as well as the number of options granted and associated fair value calculations for Board members.grant date. These costs were partially offset by a decrease in finance-related contract costs.
Other significant items impacting the change in the Company’s net loss are noted below:
Other income for 2020 represents the forgiveness of the Company’s SBA Loan as discussed in Note 6 to the financial statements included in this Quarterly Report on Form 10-Q.
Loss on extinguishment for 2020 represents the loss incurred in connection with the conversion of the Nordmin accounts payable balance to a one-year convertible debt instrument, as discussed in Note 5 to the financial statements included in this Quarterly Report on Form 10-Q.
Change in financial instrument fair valuerepresents non-cash changes in the market value of the Convertible Security,convertible securities, which isare carried at fair value, as well as changes in the market value of the derivative liability component of the Convertible Notes,Company’s outstanding convertible promissory notes. Higher costs in 2019, as compared to 2020, reflect the recognition of accrued interest and theinitial fair market valuevaluations of Warrants issued under the Convertible Security. The 2017 loss includes the value of Warrants issued toadditional advances from Lind Asset Management IV, LLC (“Lind”) in connection with the Convertible Security Increase, while the 2016 gain primarily represents the impact of declining Common Share prices and trading volumes on the underlying valuation of the Convertible Security.that period.
Foreign exchange (gain) lossgain is primarily due to changes in the United StatesU.S. dollar (“USD”) against the Canadian dollar (“C$”), and reflects the timing of foreign currency transactions, primarily U.S. dollar-based related party loans, and subsequent changes in exchange rates. The impactrates, and the increase in 2017 primarily relatesgain during 2020 as compared to changing foreign currency rates as applied2019 is due to a decline in the U.S. dollar relative to the USD-denominated convertible debt instrumentsCanadian dollar in 2020.
Interest expense increased in 2020 as compared to 2019 primarily due to the timing of increases in principal amounts outstanding under the non-revolving credit facility agreement (the “Credit Agreement”) with Mark Smith, President, Chief Executive Officer (“CEO”) and related party debt, which are recorded on the Canadian parent company books in C$.Executive Chairman of NioCorp.
Three months ended December 31, 20172020 compared to three months ended December 31, 20162019
Overall, the increase in net loss for the quarterthree months ended December 31, 20172020, as compared to the same period in 20162019, is primarily the result of primarily the same factors underlying the six-month changes as discussed above, with respect to employee-related costs, professional fees, exploration expenditures, change in financial instrument fair value, and foreign exchange (gain) loss.above.
Liquidity and Capital Resources
We have no revenue generating operations from which we can internally generate funds. To date, our ongoing operations have been financed by the sale of our equity securities by way of private placements, convertible securities issuances, and the exercise of incentive stock options and share purchase warrants. Wewarrants, and related party loans. While the COVID-19 pandemic has created uncertainty with respect to overall project funding timelines, we believe that we will be able to secure additional private placement financings in the future, although we cannot predict the timing, size, or pricing of any such financings. In addition, we maycould raise funds through the sale of interests in our mineral properties, although current market conditions and the impacts of the COVID-19 pandemic have substantially reduced the number of potential buyers/acquirers of any such interest(s).interests.
As of December 31, 2017,2020, the Company had cash of $0.1 million and a working capital deficit of $4.4$7.5 million, compared to cash of $0.2$0.3 million and working capital deficit of $5.8$7.7 million on June 30, 2017. This change in working capital is the result of cash inflows from financing initiatives and the continued conversion of the Convertible Security. These positive impacts to the2020. The working capital deficit were partially offset by year-to-date operating expendituresdecreased due to the timing of warrant redemptions to support current operations and the transfer of our convertible notes obligation from long terma continued effort to current liabilities. As noted above under “Recent Corporate Events”, as of February 7, 2018, Lind had invested the full $2.5 million Second Tranche Increase. Subject to certain conditions, Lind may provide additional funding for up to $2 million as part of the Second Tranche funding.reduce outstanding accounts payable balances.
We expect that the Company will operate at a loss for the foreseeable future. The Company’s current planned operational needs are approximately $3.1$6.0 million until June 30, 2018, net of the recent investment by Lind and assuming the Company’s exercise of its right to call an additional $1.0 million under the Lind Agreement.2021. In addition to outstanding accounts payable and short-term liabilities, our average monthly expenditures are approximately $379$265 per month where approximately $289$230 is for administrative purposes, includingcorporate overhead and estimated costs related to securing financing necessary for advancement of the Elk Creek Project. Approximately $89$35 per month is planned for expenditures relating to the advancement of Elk Creek Project.Project by NioCorp’s wholly owned subsidiary, Elk Creek Resources Corp. The Company’s ability to continue operations and fund our current work plan is dependent on Management’smanagement’s ability to secure additional financing.
The Company anticipates that it may need to raise $5.0 to 6.0$7.0 million - $8.5 million to continue planned operations for the next twelve months focused on financing, permitting, option-to-purchase agreement exercises and detailed engineering efforts related to the Elk Creek Resources Project. Management is actively pursuing such additional sources of debt and equity 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.
Elk Creek Propertyproperty lease commitments are $34$35 until June 30, 2018.2021. To maintain its currently held properties and fund its currently anticipated general and administrative costs and planned exploration and development activities at the Elk Creek Project for the fiscal year ending June 30, 2018,2021, the Company will likely require additional financing during the current fiscal year. Should such financing not be available in that time-frame,timeframe, we will be required to reduce our activities and will not be able to carry out all our presently planned activities at the Elk Creek Project.
Other than the Lind Second Tranche funding arrangements, discussed above under “Recent Corporate Events”, weWe currently have no further funding commitments or arrangements for additional financing at this time (other than the potential exercise of optionsOptions and Warrants) and there is no assurance that we will be able to obtain additional financing on acceptable terms, if at all. There is significant uncertainty that we will be able to secure any additional financing in the current equity or debt markets. The quantity of funds to be raised and the terms of any proposed equity or debt financing that may be undertaken will be negotiated by Managementmanagement as opportunities to raise funds arise. Management intends to pursue funding sources of both debt and equity financing, including but not limited to the issuance of equity securities in the form of Common Shares, Warrants, subscription receipts, or any combination thereof in Unitsunits of the Company pursuant to private placements to accredited investors or pursuant to equity lines of credit or public offerings in the form of underwritten/brokered offerings, at-the-market offerings, registered direct offerings, or other forms of equity financing and public or private issuances of debt securities including secured and unsecured convertible debt instruments or secured debt project financing. Management does not currently know the terms pursuant to which such financings may be completed in the future, but any such financings will be negotiated at arms’-length.arm’s-length. Future financings involving the issuance of equity securities or derivatives thereof will likely be completed at a discount to the then-current market price of the Company’s securities and will likely be dilutive to current shareholders.
The audit opinion and notes that accompany our financial statements for the year ended June 30, 20172020 disclose a “going concern” qualification and disclosuresthat substantial doubt exists as to our ability to continue in business. The financial statements included in this Quarterly Report on Form 10-Q have been prepared under the assumption that we will continue as a going concern. We are an exploration stage company and we have incurred losses since our inception. We do not have sufficient cash to fund normal operations and meet debt obligations for the next 12twelve months without deferring payment on certain current liabilities and raising additional funds. The continued spread of COVID-19 has resulted in business travel restrictions and capital market disruptions, and this has had an adverse impact on our ability to obtain financing, development plans, results of operations, financial position, and cash flows during the current fiscal year. We believe that the going concern conditionuncertainty cannot be removedalleviated with confidence until the Company has entered into a business climate where funding of its planned ongoing operating activities is secured.
We have no exposure to any asset-backed commercial paper. Other than cash held by our subsidiaries for their immediate operating needs in Colorado and Nebraska, all of our cash reserves are on deposit with major United States and Canadian chartered banks. We do not believe that the credit, liquidity, or market risks with respect thereto have increased as a result of the current market conditions. However, in order to achieve greater security for the preservation of our capital, we have, of necessity, been required to accept lower rates of interest, which has also lowered our potential interest income.
Operating Activities
During the six months ended December 31, 2017,2020, the Company’s operating activities consumed $2.6$1.8 million of cash (2016: $5.1(2019: $1.4 million). The cash used in operating activities for 2017the six months ended December 31, 2020 reflects the Company’s funding of losses of $3.8$2.1 million, partially offset by share-based compensation charges, and other non-cash transactions. Overall, 2017 operational outflows declined from 2016 due to the timing of the work efforts on the August 2017 Feasibility Studytransactions and the Revised Elk Creek Feasibility Study, offset by changesa $0.1 million decrease in accounts payable and accrued liabilities. Overall, operational outflows during the six months ended December 31, 2020 increased from the corresponding period of 2019 due to the continued focus on paying down our outstanding accounts payable. Going forward, the Company’s working capital requirements are expected to increase substantially in connection with the development of the Elk Creek Project.
Financing Activities
Financing inflows were $2.1$1.6 million during the six months ended December 31, 20172020, as compared to $1.7$1.1 million during the corresponding period in 2016,2019, primarily reflecting the timing of convertiblewarrant and option exercises and related party debt instrument and private placement issuancesdrawdowns initiated during the comparative periods, as well as financing provided by NioCorp’s President, CEO and Executive Chairman, Mark Smith.periods.
Cash Flow Considerations
As noted above under “COVID-19,” the COVID-19 pandemic has created uncertainty with respect to overall project funding timelines. The Company has historically relied upon debt and equity financings and, to a lesser degree, debt financings, to satisfy its capital requirements and will continue to depend heavily upon equity capital to finance its activities. The Company may pursue additional debt and/or equity financing in the medium term if it is able to procure such financing on terms more favorable than available equity financing;term; however, there can be no assurance the Company will be able to obtain any required financing in the future on acceptable terms.
The Company has limited financial resources compared to its proposed expenditures, no source of operating income, and no assurance that additional funding will be available to it for current or future projects, although the Company has been successful in the past in financing its activities through the sale of equity securities.
The ability of the Company to arrange additional financing in the future will depend, in part, on the prevailing capital market conditions, including the impacts of the COVID-19 pandemic on the timing and availability of funding, and its success in developing the Elk Creek Project. Any quoted market for the Common Shares may be subject to market trends generally, notwithstanding any potential success of the Company in creating revenue, cash flows, or earnings, and any depression of the trading price of the Common Shares could impact its ability to obtain equity financing on acceptable terms.
Historically, the Company has used net proceeds from issuances of Common Shares to provide sufficient funds to meet its near-term exploration and development plans and other contractual obligations when due. However, further development and construction of the Elk Creek Project will require substantial additional capital resources. This includes near-term funding and, ultimately, funding for Elk Creek Project construction and other costs. See “Liquidity and Capital Resources” above for the Company’s discussion of arrangements related to possible future financing(s).financings.
Contractual Obligations
Other than as described below, thereThere have been no material changes to our contractual obligations discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “Tabular Disclosure of Contractual“Contractual Obligations” as of June 30, 2017,2020, in our Annual Report on Form 10-K for the fiscal year ended June 30, 2017. During2020, other than (i) the six-month period ended December 31, 2017, debt obligations decreased $3.0 million due to conversionssigning of the three-year corporate office lease extension; (ii) the conversion of the remaining balance under the convertible security held by Lind of $38 into 64,298 Common Shares on July 9, 2020; (iii) the conversion of $50 of the Company’s convertible promissory notes into 67,695 Common Shares on the maturity date, October 14, 2020; (iv) the forgiveness of $186 of the SBA Loan on November 18, 2020; and (v) the set-off of accounts payable relating to past services provided by Nordmin with the issuance of the Nordmin Note in the principal amount of $1,872 on December 18, 2020. Effective October 14, 2020, the maturity date for the remaining $750 of the Company’s convertible promissory notes was extended for one year to October 14, 2021 and effective December 14, 2020, the maturity dates for the loan from Mark Smith and the Credit Agreement partially offset by the $1.2 million Convertible Security Increase. There were no other substantial changesextended to contractual obligations.December 15, 2021.
Off BalanceOff-Balance Sheet Arrangements
The Company has no off balanceoff-balance sheet arrangements.
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Critical Accounting Policies
There have been no material changes in our critical accounting policies discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “Critical Accounting Policies” as of June 30, 2017,2020, in our Annual Report on Form 10-K for the fiscal year ended June 30, 2017.2020.
Certain U.S. Federal Income Tax Considerations
The Company has been a “passive foreign investment company” (“PFIC”) as defined under Section 1297 of the U.S. Internal Revenue Code of 1986, as amended, in recent years and expects to continue to be a PFIC in the future. Current and prospective United States shareholders should consult their tax advisors as to the tax consequences of PFIC classification and the U.S. federal tax treatment of PFICs. Additional information on this matter is included in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017,2020, under the heading “Risks Related to the Common Shares.”
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest rate risk
The Company’s exposure to changes in market interest rates, relates primarily to the Company’s earned interest income on cash deposits and short-term investments. The Company maintains a balance between the liquidity of cash assets and the interest rate return thereon. The carrying amount of financial assets, net of any provisions for losses, represents the Company’s maximum exposure to credit risk.
Foreign currency exchange risk
The company incurs expenditures in both USDU.S. dollars and C$.Canadian dollars. Canadian dollar expenditures are primarily related to metallurgical-related exploration expenses, as well as certain Common Share-related costs and corporate professional services. As a result, currency exchange fluctuations may impact the costs of our operating activities. To reduce this risk, we maintain sufficient cash balances in C$Canadian dollars to fund expected near-term expenditures.
Commodity price risk
The Company is exposed to commodity price risk related to the elements associated with the Elk Creek Project. A significant decrease in the global demand for these elements may have a material adverse effect on our business. The Elk Creek Project is not in production, and the Company does not currently hold any commodity derivative positions.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
At the end of the period covered by this Quarterly Report on Form 10-Q for the quarter ended December 31, 2017,2020, an evaluation was carried out under the supervision of and with the participation of our Management,management, including the CEO and the Chief Financial Officer (“CFO”), of the effectiveness of the design and operations of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act). Based on that evaluation, the CEO and the CFO have concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were effective in ensuring that: (i) information required to be disclosed by us in reports that we file or submit to the SEC under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our Management,management, including ourthe CEO and the CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.
Our Management does not expect that our disclosure controls and procedures will prevent all error and all fraud. The effectiveness of our or any system of disclosure controls and procedures, however well designed and operated, can provide only reasonable assurance that the objectives of the system will be met and is subject to certain limitations, including the exercise of judgment in designing, implementing and evaluating controls and procedures and the assumptions used in identifying the likelihood of future events.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting during the three months ended December 31, 20172020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controlscontrol over financial reporting.
We know of no material, active, or pending legal proceedings against the Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers, or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
There have been no changes to the risk factors set forth under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2017.2020.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
On October 14, 2020, the Company issued 67,695 Common Shares upon conversion of $50 of the Company’s convertible promissory notes. The Common Shares were issued pursuant to Section 3(a)(9) of the Securities Act.
On December 18, 2020, the Company issued 836,551 Common Shares to Nordmin upon conversion of $450 in Principal amount of the Nordmin Note at a conversion price of C$0.684 per share. The Nordmin Note, the Nordmin Warrants and such Common Shares were issued, among other exemptions, pursuant to the exemption from the registration requirements of the Securities Act of 1933 provided by Section 4(a)(2) thereof based upon representations and warranties of Nordmin in connection therewith.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Pursuant to Section 1503(a) of the Dodd-Frank Act, issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose specified information about mine health and safety in their periodic reports. These reporting requirements are based on the safety and health requirements applicable to mines under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”) which is administered by the U.S. Department of Labor’s Mine Safety and Health Administration (“MSHA”). During the three-month period ended December 31, 2017,2020, the Company and its subsidiaries and their properties or operations were not subject to regulation by MSHA under the Mine Act and thus no disclosure is required under Section 1503(a) of the Dodd-Frank Act.
None.
(1) | Previously filed as an exhibit to the Company’s Draft Registration Statement on Form S-1 (Registration No. 377-01354) submitted to the SEC on July 26, 2016 and incorporated herein by reference. | |
(2) | Previously filed as an exhibit to the Company’s Current Report on Form 8-K | |
(3) | Previously filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on November | |
(4) | Previously filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on December 14, 2020 and incorporated herein by reference. |
(5) | Submitted Electronically Herewith. Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Interim Consolidated Balance Sheets as of December 31, |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
NIOCORP DEVELOPMENTS LTD.
(Registrant)
By: | /s/ Mark A. Smith | |
Mark A. Smith | ||
President, Chief Executive Officer and Executive Chairman | ||
(Principal Executive Officer) | ||
Date: February | ||
By: | /s/ Neal Shah | |
Neal Shah | ||
Chief Financial Officer | ||
(Principal Financial and Accounting Officer) | ||
Date: February |