Exhibit 99.1
FINANCIAL STATEMENTS
Condensed consolidated interim unaudited financial statements
For the three and six-month periods ended June 30, 2022 and 2021
(Expressed in thousands of Canadian dollars, except where otherwise indicated)
TABLE OF CONTENTS
Consolidated statements of financial position | 1 |
Consolidated statements of loss and comprehensive loss | 2 |
Consolidated statements of changes in equity | 3 |
Consolidated statements of cash flows | 4 |
Notes to the condensed consolidated interim financial statements | 5 |
NOUVEAU MONDE GRAPHITE INC. | |
Consolidated statements of financial position | |
(Amounts expressed in thousands of Canadian dollars - unaudited) |
Consolidated statements of financial position
Notes | As at June 30, 2022 | As at December 31, 2021 | ||||||||
ASSETS | ||||||||||
CURRENT | ||||||||||
Cash | 32,110 | 62,355 | ||||||||
Grants receivable and other current assets | 2,583 | 3,096 | ||||||||
Sales taxes receivable | 2,136 | 2,002 | ||||||||
Tax credits receivable | 3,400 | 3,958 | ||||||||
Prepaid expenses | 278 | 2,768 | ||||||||
Total current assets | 40,507 | 74,179 | ||||||||
NON-CURRENT | ||||||||||
Tax credits receivable | 5,870 | 5,509 | ||||||||
Property, plant and equipment | 5 | 55,289 | 42,103 | |||||||
Intangible assets | 332 | 481 | ||||||||
Right-of-use assets | 2,937 | 2,254 | ||||||||
Restricted cash and deposits | 1,634 | 1,823 | ||||||||
Total non-current assets | 66,062 | 52,170 | ||||||||
Total assets | 106,569 | 126,349 | ||||||||
LIABILITIES | ||||||||||
CURRENT | ||||||||||
Accounts payable and accrued liabilities | 15,237 | 15,193 | ||||||||
Current portion of lease liabilities | 427 | 329 | ||||||||
Borrowings | 216 | 208 | ||||||||
Total current liabilities | 15,880 | 15,730 | ||||||||
NON-CURRENT | ||||||||||
Asset retirement obligation | 955 | 1,009 | ||||||||
Borrowings | 1,843 | 1,921 | ||||||||
Lease liabilities | 2,615 | 1,994 | ||||||||
Total non-current liabilities | 5,413 | 4,924 | ||||||||
Total liabilities | 21,293 | 20,654 | ||||||||
EQUITY | ||||||||||
Share capital | 6.1 | 210,249 | 206,483 | |||||||
Contributed surplus | 22,030 | 16,102 | ||||||||
Deficit | (147,003 | ) | (116,890 | ) | ||||||
Total equity | 85,276 | 105,695 | ||||||||
Total liabilities and equity | 106,569 | 126,349 | ||||||||
Going Concern | 1 | |||||||||
Commitments | 14 | |||||||||
Subsequent Events | 15 |
APPROVED BY THE BOARD OF DIRECTORS
(s) Eric Desaulniers – “Director”
(s) Daniel Buron – “Director”
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
1
NOUVEAU MONDE GRAPHITE INC. | |
Consolidated statements of loss and comprehensive loss | |
(Amounts expressed in thousands of Canadian dollars - unaudited) |
Consolidated statements of loss and comprehensive loss
For the three-month periods ended | For the six-month periods ended | |||||||||||||||||
Notes | June 30, 2022 $ | June 30, 2021 $ | June 30, 2022 $ | June 30, 2021 $ | ||||||||||||||
EXPENSES | ||||||||||||||||||
Exploration and evaluation expenses | 7 | 2,014 | 2,499 | 3,996 | 5,007 | |||||||||||||
Battery Material Plant project expenses | 8 | 5,471 | 908 | 11,086 | 1,191 | |||||||||||||
General and administrative expenses | 9 | 6,968 | 9,370 | 15,318 | 13,382 | |||||||||||||
Other income | - | (56 | ) | - | (56 | ) | ||||||||||||
Operating loss | 14,453 | 12,721 | 30,400 | 19,524 | ||||||||||||||
Net financial costs (income) | 10 | (411 | ) | 157 | (287 | ) | 798 | |||||||||||
Net loss and comprehensive loss | 14,042 | 12,878 | 30,113 | 20,322 | ||||||||||||||
Basic and diluted loss per share | 0.25 | 0.34 | 0.54 | 0.57 | ||||||||||||||
Weighted average number of shares outstanding | 6.1 | 55,560,540 | 37,709,064 | 55,368,957 | 35,757,150 |
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
2
NOUVEAU MONDE GRAPHITE INC. | |
Consolidated statements of changes in equity | |
(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited) |
Consolidated statements of changes in equity
For the six-month period ended June 30, 2022 | ||||||||||||||||||||||
Notes | Number | Share capital $ | Contributed surplus and warrants $ | Deficit $ | Total equity $ | |||||||||||||||||
Balance as at January 1, 2022 | 55,118,316 | 206,483 | 16,102 | (116,890 | ) | 105,695 | ||||||||||||||||
Shares issued from offering | 6.1 | 502,082 | 3,987 | - | 3,987 | |||||||||||||||||
Options exercised | 6.2 | 123,500 | 539 | (183 | ) | - | 356 | |||||||||||||||
Share-based compensation | - | - | 6,111 | - | 6,111 | |||||||||||||||||
Share issue costs | - | (760 | ) | - | - | (760 | ) | |||||||||||||||
Net loss and comprehensive loss | - | - | - | (30,113 | ) | (30,113 | ) | |||||||||||||||
Balance as at June 30, 2022 | 55,743,898 | 210,249 | 22,030 | (147,003 | ) | 85,276 |
For the six-month period ended June 30, 2021 | ||||||||||||||||||||||||||
Notes | Number | Share capital $ | Contributed surplus and warrants $ | Equity component of convertible bond $ | Deficit $ | Total equity $ | ||||||||||||||||||||
Balance as at January 1, 2021 | 27,299,332 | 60,537 | 10,761 | 364 | (77,000 | ) | (5,338 | ) | ||||||||||||||||||
Shares issued from offerings | 9,501,227 | 95,939 | - | - | - | 95,939 | ||||||||||||||||||||
Warrants exercised | 7,821,700 | 17,825 | (198 | ) | - | - | 17,627 | |||||||||||||||||||
Options exercised | 331,251 | 1,476 | (517 | ) | - | - | 959 | |||||||||||||||||||
Shares issued for interest payment | 76,635 | 797 | - | - | - | 797 | ||||||||||||||||||||
Share-based compensation | - | - | 5,939 | - | - | 5,939 | ||||||||||||||||||||
Share issue costs | - | (7,166 | ) | - | - | - | (7,166 | ) | ||||||||||||||||||
Net loss and comprehensive loss | - | - | - | - | (20,322 | ) | (20,322 | ) | ||||||||||||||||||
Balance as at June 30, 2021 | 45,030,145 | 169,408 | 15,985 | 364 | (97,322 | ) | 88,435 |
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
3
NOUVEAU MONDE GRAPHITE INC. | |
Consolidated statements of cash flow | |
(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited) |
Consolidated statements of cash flows
For the six-month periods ended | ||||||||||
Notes | June 30, 2022 $ | June 30, 2021 $ | ||||||||
OPERATING ACTIVITIES | ||||||||||
Net loss | (30,113 | ) | (20,322 | ) | ||||||
Depreciation and amortization | 5 | 2,185 | 558 | |||||||
Unrealized foreign exchange gain | (177 | ) | (566 | ) | ||||||
Share-based compensation | 6.2 | 5,615 | 5,939 | |||||||
Financial costs | 41 | 1,303 | ||||||||
Net change in working capital | 11 | (427 | ) | (697 | ) | |||||
Cash flows used in operating activities | (22,876 | ) | (13,785 | ) | ||||||
INVESTING ACTIVITIES | ||||||||||
Additions to property, plant, and equipment | 5 - 11 | (11,813 | ) | (11,752 | ) | |||||
Restricted cash and deposits | 189 | (1,483 | ) | |||||||
Grants received | 795 | 1,468 | ||||||||
Cash flows used in investing activities | (10,829 | ) | (11,767 | ) | ||||||
FINANCING ACTIVITIES | ||||||||||
Proceeds from offering | 3,987 | 95,939 | ||||||||
Proceeds from borrowings, net of issue costs | - | 1,025 | ||||||||
Repayment of borrowings and lease liabilities | (288 | ) | (2,108 | ) | ||||||
Proceeds from the exercise of warrants | - | 17,627 | ||||||||
Proceeds from the exercise of stock options | 6.2 | 356 | 959 | |||||||
Share issue costs | (803 | ) | (6,528 | ) | ||||||
Cash flows from financing activities | 3,252 | 106,914 | ||||||||
Effect of exchange rate changes on cash | 208 | 575 | ||||||||
Net change in cash | (30,245 | ) | 81,937 | |||||||
Cash at the beginning of the period | 62,355 | 4,520 | ||||||||
Cash at the end of the period | 32,110 | 86,457 | ||||||||
Additional information | 11 |
The accompanying notes are an integral part of the condensed consolidated interim financial statement
4
NOUVEAU MONDE GRAPHITE INC. | |
Notes to the condensed consolidated interim financial statements | |
(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited) |
Notes to the condensed consolidated interim financial statements
1. | NATURE OF OPERATIONS AND GOING CONCERN |
Nouveau Monde Graphite Inc. (the “Company”) was established on December 31, 2012, under the Canada Business Corporations Act. The Company specializes in exploration, evaluation and development of mineral properties located in Québec and is developing a natural graphite-based anode material that would qualify as battery-grade material to supply the lithium-ion industry.
The Company’s shares are listed under the symbol NMG on the New York Stock Exchange, NOU on the TSX Venture Exchange (“TSXV”), and NM9A on the Frankfurt Stock Exchange. The Company’s registered office is located at 481 Brassard Street, Saint-Michel-des-Saints, Québec, Canada, J0K 3B0.
The Company’s condensed consolidated interim financial statements have been prepared using accounting principles applicable to a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business as they come due. In assessing whether the going concern assumption is appropriate, management considers all available information about the future, which is at least, but not limited to, the next twelve months.
Management believes that without additional funding, the Company does not have sufficient liquidity to pursue its planned expenditures over the next twelve months. These circumstances indicate the existence of material uncertainties that cast substantial doubt upon the Company’s ability to continue as a going concern and accordingly, the appropriateness of the use of IFRS applicable to a going concern.
The Company's ability to continue future operations and fund its development and acquisition activities is dependent on management's ability to secure additional financing in the future, which may be completed in a number of ways including, but not limited to, the issuance of debt or equity instruments, expenditure reductions, or a combination of strategic partnerships, joint venture arrangements, project debt finance, offtake financing, royalty financing and other capital markets alternatives. While management has been successful in securing financing in the past, there can be no assurance it will be able to do so in the future or that these sources of funding or initiatives will be available for the Company or that they will be available on terms which are acceptable to the Company.
These consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities, expenses and financial position classifications that would be necessary if the going concern assumption was not appropriate. These adjustments could be significant.
2. | BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE |
The Company’s condensed consolidated interim financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRS”), as published by the International Accounting Standards Board (“IASB”), including IAS 34 Interim Financial Reporting, and also using the same accounting policies and procedures as those used for the Company’s audited consolidated financial statements as at December 31, 2021, taking into consideration the new policies described in Note 4. These condensed consolidated interim financial statements do not include all the disclosures and notes required for annual consolidated financial statements and should therefore be read with the Company’s audited consolidated financial statements as at December 31, 2021, which have been prepared in accordance with IFRS.
The condensed consolidated interim financial statements for the three and six-month periods ended June 30, 2022 (including comparative statements) were approved and authorized for publication by the Board of Directors on August 10, 2022.
5
NOUVEAU MONDE GRAPHITE INC. | |
Notes to the condensed consolidated interim financial statements | |
(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited) |
3. | ESTIMATES, JUDGEMENTS AND ASSUMPTIONS |
In preparing its consolidated financial statements, management makes several judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, revenues, and expenses.
Information about the significant estimates and assumptions that have the greatest impact on the recognition and measurement of assets, liabilities, revenues, and expenses can be found in the note 5 of the Consolidated audited annual financial statement. Actual results may differ significantly.
4. | SIGNIFICANT ACCOUNTING POLICIES |
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recognized at cost less accumulated depreciation and accumulated impairment losses. The assets are capitalized and amortized on a straight-line basis in the consolidated statement of loss and comprehensive loss. Generally, the depreciation rates are as follows:
Buildings | 10-25 years |
Equipment | 2-15 years |
The residual value, depreciation method and the useful life of each asset are reviewed at least at each financial year-end. Gains or losses arising on the disposal of property and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognized in the statement of loss and comprehensive loss.
AMENDMENTS TO IAS 16, PROPERTY, PLANT AND EQUIPMENT
The IASB has made amendments to IAS 16 Property, plant and equipment, effective for financial years beginning on or after January 1, 2022. Proceeds from selling items before the related item of Property, plant and equipment is available for use should be recognized in profit or loss, together with the costs of producing those items. The Company therefore needs to distinguish between the costs associated with producing and selling items before the item of Property, plant and equipment (pre-production revenue) is available for use and the costs associated with making the item of Property, plant and equipment available for its intended use. For the sale of items that are not part of a company’s ordinary activities, the amendments require the Company to disclose separately the sales proceeds and related production cost recognized in profit or loss and specify the line items in which such proceeds and costs are included in the statement of loss and comprehensive loss. These amendments have currently no impact on the Company’s consolidated financial statements. While these amendments did not have retrospective effects upon adoption, any future sales of products and related costs of sales occurring before commercial production is achieved will be recorded in the statement of loss and comprehensive loss.
6
NOUVEAU MONDE GRAPHITE INC. | |
Notes to the condensed consolidated interim financial statements | |
(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited) |
5. | PROPERTY, PLANT AND EQUIPMENT |
For the six-month period ended June 30, 2022 | ||||||||||||||||||||||||||||||||||||
Land $ | Buildings $ | Equipment $ | Computers $ | Furniture $ | Rolling stock $ | Mine under construction $ | Battery Material Demonstration Plant under construction $ | Total $ | ||||||||||||||||||||||||||||
COST | ||||||||||||||||||||||||||||||||||||
Balance as at January 1, 2022 | 2,412 | 2,791 | 163 | 141 | 25 | 53 | 18,032 | 18,886 | 42,503 | |||||||||||||||||||||||||||
Additions | - | 15 | 153 | - | - | - | 8,565 | 6,251 | 14,984 | |||||||||||||||||||||||||||
Transfers | - | 461 | 9,402 | - | 93 | 26 | - | (9,982 | ) | - | ||||||||||||||||||||||||||
Balance as at June 30, 2022 | 2,412 | 3,267 | 9,718 | 141 | 118 | 79 | 26,597 | 15,155 | 57,487 | |||||||||||||||||||||||||||
ACCUMULATED DEPRECIATION | ||||||||||||||||||||||||||||||||||||
Balance as at January 1, 2022 | - | 330 | 19 | 25 | 11 | 15 | - | - | 400 | |||||||||||||||||||||||||||
Depreciation | - | 109 | 1,646 | 23 | 7 | 13 | - | - | 1,798 | |||||||||||||||||||||||||||
Balance as at June 30, 2022 | - | 439 | 1,665 | 48 | 18 | 28 | - | - | 2,198 | |||||||||||||||||||||||||||
Net book value as at June 30, 2022 | 2,412 | 2,828 | 8,053 | 93 | 100 | 51 | 26,597 | 15,155 | 55,289 |
For the year ended December 31, 2021 | ||||||||||||||||||||||||||||||||||||
Land $ | Buildings $ | Equipment $ | Computers $ | Furniture $ | Rolling stock $ | Mine under construction $ | Battery Material Demonstration Plant under construction $ | Total $ | ||||||||||||||||||||||||||||
COST | ||||||||||||||||||||||||||||||||||||
Balance as at January 1, 2021 | 507 | 2,642 | - | 56 | 70 | 24 | - | 1,206 | 4,505 | |||||||||||||||||||||||||||
Additions | 1,905 | 149 | 163 | 132 | - | 29 | 18,032 | 17,680 | 38,090 | |||||||||||||||||||||||||||
Write-Off/Disposals | - | - | - | (47 | ) | (45 | ) | - | - | - | (92 | ) | ||||||||||||||||||||||||
Balance as at December 31, 2021 | 2,412 | 2,791 | 163 | 141 | 25 | 53 | 18,032 | 18,886 | 42,503 | |||||||||||||||||||||||||||
ACCUMULATED DEPRECIATION | ||||||||||||||||||||||||||||||||||||
Balance as at January 1, 2021 | - | 219 | - | 39 | 32 | 8 | - | - | 298 | |||||||||||||||||||||||||||
Depreciation | - | 111 | 19 | 30 | 22 | 7 | - | - | 189 | |||||||||||||||||||||||||||
Write-Off/Disposals | - | - | - | (44 | ) | (43 | ) | - | - | - | (87 | ) | ||||||||||||||||||||||||
Balance as at December 31, 2021 | - | 330 | 19 | 25 | 11 | 15 | - | - | 400 | |||||||||||||||||||||||||||
Net book value as at December 31, 2021 | 2,412 | 2,461 | 144 | 116 | 14 | 38 | 18,032 | 18,886 | 42,103 |
The acquisition for the Battery Material Demonstration Plant under construction is presented net of grants of $40 and $66 for the three and six-month periods ended June 30, 2022, respectively (three and six-month periods ended June 30, 2021: $1,830 and $3,578)
7
NOUVEAU MONDE GRAPHITE INC. | |
Notes to the condensed consolidated interim financial statements | |
(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited) |
6. | EQUITY |
6.1 | SHARE CAPITAL |
Authorized share capital
Unlimited number of common shares voting and participating, with no par value.
For the six-month period ended June 30, 2022 | For the year ended December 31, 2021 | |||||||
Shares issued at the start of the period | 55,118,316 | 27,299,332 | ||||||
Shares issued from offering | 502,082 | 11,479,977 | ||||||
Warrants exercised | - | 7,821,700 | ||||||
Options exercised | 123,500 | 720,201 | ||||||
Shares issued for conversion of debt (convertible bond) | - | 7,500,000 | ||||||
Shares issued for interest payment | - | 297,106 | ||||||
Shares issued at the end of period | 55,743,898 | 55,118,316 |
On January 21, 2022, the Company filed a prospectus supplement establishing a new at-the-market equity offering (“ATM Offering”). The ATM Offering allows the Company to offer for sale and issue up to US$75 million (or the equivalent in Canadian dollars) of common shares of the Company from time to time, at the Company’s discretion. As at June 30, 2022, the Company issued 502,082 common shares at an average price of $7.97 for a gross proceeds of $3,987, commissions of $100, and total net proceeds of $3,887.
6.2 | SHARE-BASED PAYMENTS |
The Board of Directors determines the price per common share and the number of common shares which may be allocated to each director, officer, employee and consultant and all other terms and conditions of the option, subject to the rules of the TSXV. The plan has a policy that caps the maximum of total options that can be granted to 10% of the total outstanding shares of the Company.
All share-based payments will be settled in equity. The Company has no legal or contractual obligation to repurchase or settle the options in cash.
The Company’s share options are as follows:
For the six-month period ended June 30, 2022 | For the year ended December 31, 2021 | |||||||||||||||
Number | Weighted average exercise price $ | Number | Weighted average exercise price $ | |||||||||||||
Opening balance | 2,352,250 | 7.07 | 2,400,000 | 3.20 | ||||||||||||
Granted | 2,027,804 | 8.29 | 735,000 | 15.95 | ||||||||||||
Exercised | (123,500 | ) | 2.88 | (720,200 | ) | 3.06 | ||||||||||
Expired | (2,500 | ) | 16.84 | (51,300 | ) | 7.00 | ||||||||||
Forfeited | (21,250 | ) | 16.84 | (1,250 | ) | 16.84 | ||||||||||
Cancelled | - | - | (10,000 | ) | 16.84 | |||||||||||
Ending balance | 4,232,804 | 7.72 | 2,352,250 | 7.07 | ||||||||||||
Options that can be exercised | 2,710,750 | 7.83 | 2,058,500 | 7.30 |
For the six-month period ended June 30, 2022, the Company granted 247,500 options to directors, 525,000 to officers, 490,500 to employees, and 764,804 to consultants. The vesting period on option granted varies from vesting immediately up to four semi-annual tranches. Each option entitles the holder to subscribe to one common share of the Company, at an average price of $8.29 per common share, for an average period of 4.02 years.
8
NOUVEAU MONDE GRAPHITE INC. | |
Notes to the condensed consolidated interim financial statements | |
(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited) |
The weighted average fair value of the share options granted in the six-month period ended June 30, 2022, were estimated using the Black-Scholes option pricing model based on the following average assumptions:
● | Stock price when granted: $8.29 | |
● | Expected life: 4.02 years | |
● | Expected volatility: 82% | |
● | Risk-free rate: 2.24% | |
● | Expected dividend: nil |
During the six-month period ended June 30, 2022, the weighted average share price at the date of exercise was $8.28.
7. | EXPLORATION AND EVALUATION EXPENSES |
For the three-month periods ended | For the six-month periods ended | |||||||||||||||
June 30, 2022 $ | June 30, 2021 $ | June 30, 2022 $ | June 30, 2021 $ | |||||||||||||
Wages and benefits | 902 | 805 | 1,835 | 1,589 | ||||||||||||
Share-based compensation | 251 | 204 | 513 | 204 | ||||||||||||
Engineering | 75 | 632 | 135 | 1,802 | ||||||||||||
Professional fees | 96 | 95 | 139 | 127 | ||||||||||||
Materials, consumables, and supplies | 379 | 416 | 689 | 479 | ||||||||||||
Subcontracting | 263 | 248 | 563 | 641 | ||||||||||||
Geology and drilling | 9 | 72 | 24 | 114 | ||||||||||||
Utilities | 86 | 81 | 234 | 172 | ||||||||||||
Depreciation and amortization | 75 | 54 | 135 | 107 | ||||||||||||
Other | 48 | 32 | 89 | 76 | ||||||||||||
Grants | - | (36 | ) | - | (36 | ) | ||||||||||
Tax credits | (170 | ) | (104 | ) | (360 | ) | (268 | ) | ||||||||
Exploration and evaluation expenses | 2,014 | 2,499 | 3,996 | 5,007 |
8. | BATTERY MATERIAL PLANT PROJECT EXPENSES |
For the three-month periods ended | For the six-month periods ended | |||||||||||||||
June 30, 2022 $ | June 30, 2021 $ | June 30, 2022 $ | June 30, 2021 $ | |||||||||||||
Wages and benefits | 721 | 185 | 1,256 | 312 | ||||||||||||
Share-based compensation | 278 | - | 287 | - | ||||||||||||
Engineering | 2,534 | 492 | 5,901 | 558 | ||||||||||||
Professional fees | 340 | 332 | 689 | 422 | ||||||||||||
Materials, consumables, and supplies | 408 | 125 | 996 | 301 | ||||||||||||
Subcontracting | 167 | 49 | 350 | 89 | ||||||||||||
Depreciation and amortization | 1,053 | 44 | 1,932 | 85 | ||||||||||||
Other | 32 | 13 | 73 | 16 | ||||||||||||
Grants | (62 | ) | (332 | ) | (398 | ) | (592 | ) | ||||||||
Battery Material Plant project expenses | 5,471 | 908 | 11,086 | 1,191 |
9
NOUVEAU MONDE GRAPHITE INC. | |
Notes to the condensed consolidated interim financial statements | |
(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited) |
9. | GENERAL AND ADMINISTRATIVE EXPENSES |
For the three-month periods ended | For the six-month periods ended | |||||||||||||||
June 30, 2022 $ | June 30, 2021 $ | June 30, 2022 $ | June 30, 2021 $ | |||||||||||||
Wages and benefits | 1,637 | 933 | 3,661 | 2,193 | ||||||||||||
Share-based compensation | 1,820 | 5,250 | 4,815 | 5,735 | ||||||||||||
Professional fees | 320 | 1,072 | 718 | 2,204 | ||||||||||||
Consulting fees | 526 | 155 | 1,038 | 435 | ||||||||||||
Travelling, representation and convention | 216 | 79 | 303 | 205 | ||||||||||||
Office and administration | 2,247 | 1,227 | 4,404 | 1,468 | ||||||||||||
Stock exchange, authorities, and communication | 130 | 477 | 241 | 760 | ||||||||||||
Depreciation and amortization | 63 | 168 | 119 | 365 | ||||||||||||
Other financial fees | 9 | 9 | 19 | 17 | ||||||||||||
General and administrative expenses | 6,968 | 9,370 | 15,318 | 13,382 |
10. | NET FINANCIAL COSTS (INCOME) |
For the three-month periods ended | For the six-month periods ended | |||||||||||||||
June 30, 2022 $ | June 30, 2021 $ | June 30, 2022 $ | June 30, 2021 $ | |||||||||||||
Foreign exchange gain | (341 | ) | (511 | ) | (177 | ) | (521 | ) | ||||||||
Interest income | (115 | ) | (53 | ) | (196 | ) | (97 | ) | ||||||||
Interest expense on lease liabilities | 6 | 28 | 8 | 58 | ||||||||||||
Accretion and interest on borrowings and bond | 39 | 693 | 78 | 1,358 | ||||||||||||
Net financial costs (income) | (411 | ) | 157 | (287 | ) | 798 |
11. | ADDITIONAL CASH FLOW INFORMATION |
For the six-month period ended June 30, 2022 $ | For the six-month period ended June 30, 2021 $ | |||||||
Grants receivable and other current assets | (216 | ) | 531 | |||||
Deferred grants | - | (1,511 | ) | |||||
Mining tax credits | 197 | (269 | ) | |||||
Sales taxes receivable | (134 | ) | (646 | ) | ||||
Prepaid expenses | 2,490 | (1,028 | ) | |||||
Accounts payable and accrued liabilities | (2,764 | ) | 2,226 | |||||
Total net change in working capital | (427 | ) | (697 | ) | ||||
Items not affecting cash | ||||||||
Property, plant and equipment included in accounts payable and accrued liabilities | 7,872 | 2,767 | ||||||
Share issue costs included in accounts payables and accrued liabilities | 6 | 638 | ||||||
Shares issued for interest payment | - | 797 |
10
NOUVEAU MONDE GRAPHITE INC. | |
Notes to the condensed consolidated interim financial statements | |
(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited) |
12. | RELATED PARTY TRANSACTIONS |
During the three and six-month periods ended June 30, 2022, share-based compensation for officers totalled $331 and $2,093 respectively ($2,750 and $3,212 for the three and six-month periods ended June 30, 2021, respectively) and for directors, nil for the three-month period ended June 30, 2022 and $1,247 for the six-month period ended June 30, 2022 (nil for the three-month period ended June 30, 2021 and $2,333 for the six-month period ended June 30, 2021).
13. | FINANCIAL INSTRUMENTS AND RISK MANAGEMENT |
FAIR VALUE
Certain of the Company's accounting policies and disclosures require the determination of fair value. Fair value represents the amount at which a financial instrument could be exchanged between willing parties, based on current markets for instruments with the same risk, principal and remaining maturity. Fair value estimates are based on quoted market values and other valuation methods. Fair values have been determined for measurement and/or disclosure purposes based on the fair value hierarchy contained in the Company’s financial instrument accounting policy. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
FINANCIAL RISKS
The Company is exposed to various financial risks resulting from its operations. The Company does not enter into derivative financial instruments for speculative purposes.
The main financial risks to which the Company is exposed as well as its policies for managing such risk are detailed below:
Liquidity risk
Liquidity risk is the risk that the Company encounters difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.
The Company manages its liquidity risk by using budgets that enable it to determine the amounts required to fund its exploration, evaluation, and development expenditure programs. The Company’s liquidity and operating results may be adversely affected if the Company’s access to the capital markets or other alternative forms of financing is hindered, whether because of a downturn in stock market conditions generally or related to matters specific to the Company. The Company has historically generated cash flow primarily from its financing activities.
Management believes that without additional funding, the Company does not have sufficient liquidity to pursue its planned expenditures over the next twelve months. These circumstances indicate the existence of material uncertainties that cast substantial doubt upon the Company’s ability to continue as a going concern and accordingly, the appropriateness of the use of IFRS applicable to a going concern (see note 1).
As at June 30, 2022, all of the Company’s short-term liabilities totalled $15,880 ($15,730 as at December 31, 2021), have contractual maturities of less than one year and are subject to normal trade terms. The Company regularly evaluates its cash position to ensure preservation and security of capital as well as maintenance of liquidity.
As at June 30, 2022 | ||||||||||||||||||||||||
Carrying amount | Contractual cash flows | Remainder of the year | Year 2023 | Year 2024 | 2025 and Onward | |||||||||||||||||||
Account payables and accrued liabilities | 15,237 | 15,237 | 15,237 | - | - | - | ||||||||||||||||||
Lease liabilities | 3,042 | 3,648 | 281 | 572 | 575 | 2,220 | ||||||||||||||||||
Borrowings | 2,059 | 2,469 | 139 | 352 | 577 | 1,401 |
Credit risk
Credit risk results from the possibility that a loss may occur from the failure of another party to perform according to the terms of the contract. The Company’s credit risk is primarily related to receivables and cash. The receivables consist mainly of the refund of the goods and services tax receivable from the governments of Canada and Quebec, as well as tax credits receivable from the Government of Quebec. The Company mitigates credit risk by maintaining cash with Canadian chartered banks.
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NOUVEAU MONDE GRAPHITE INC. | |
Notes to the condensed consolidated interim financial statements | |
(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited) |
Currency risk
Foreign currency risk is the risk that the Company’s financial performance could be affected by fluctuations in the exchange rates between currencies. Some of the Company’s expenditures are denominated in U.S dollars, and the Company holds balances in cash denominated in U.S dollars. As such, the Company is exposed to gains or losses on foreign exchange.
Currently, the Company has no hedging contracts in place and therefore has exposure to the foreign exchange rate fluctuations. The strengthening of the U.S. dollar would positively impact the Company’s net income and cash flows while the strengthening of the Canadian dollar would reduce its net income and cash flows.
The balances of cash in currencies are as follows as at June 30, 2022 and December 31, 2021.
As at June 30, 2022 $ | As at December 31, 2021 $ | |||||||
Cash in US dollars | 11,615 | 11,435 | ||||||
Canadian dollar equivalents | 14,968 | 14,497 | ||||||
Accounts payables in US dollars | 771 | 1,044 | ||||||
Canadian dollar equivalents | 994 | 1,322 |
Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate as a result of changes in market interest rates.
The Company’s interest rate risk on financial assets is primarily related to cash, which bear interest at variable rates. However, as these investments come to maturity within a short period of time, the impact would likely be not significant.
Financial liabilities are not exposed to interest rate risk since they are non-interest-bearing liabilities or bear interest at a fixed rate.
14. | COMMITMENTS |
In the normal course of business, the Company enters into contracts that give rise to commitments. As at June 30, 2022, the Company had issued $3,271 of purchase orders for the acquisition of property, plant and equipment and $4,610 in relation to the operations.
15. | SUBSEQUENT EVENTS |
The Company entered into an Option and Joint Venture agreement with Mason Graphite inc. (“Mason”) which was approved by its shareholders on July 14, 2022. On July 20, 2022 (“the closing date”), the Company was granted an option to acquire a 51% participation in the Lac Guéret property via a Joint Venture agreement with Mason. At the closing date, the Company has subscribed for 5 million common shares of Mason for a total of $2.5 million and a subsequent equity investment of $2.5 million needs to be subscribed to exercise the option. Furthermore, the Company must incur no less than $10 million within twenty-four months, including the preparation of a Preliminary Economic Assessment with a project capacity of a minimum of 250,000 tonnes per annum within six months after the closing date, and complete a Feasibility study within eighteen months after the closing date.
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