Exhibit 99.1
|
FINANCIAL STATEMENTS |
Condensed consolidated interim unaudited financial statements
For the three-month periods ended March 31, 2024 and 2023
(Expressed in thousands of Canadian dollars, except where otherwise indicated)
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 March 31, 2024 |
| As at December 31, 2023 |
ASSETS | |
|
|
|
|
|
CURRENT | |
|
|
|
|
|
Cash and cash equivalents | | |
| 88,033 |
| 36,332 |
Grants receivable and other current assets | | |
| 1,935 |
| 1,334 |
Sales taxes receivable | | |
| 1,500 |
| 1,061 |
Tax credits receivable | | |
| 1,314 |
| 1,502 |
Prepaid expenses | | |
| 2,141 |
| 2,697 |
Total current assets | | |
| 94,923 |
| 42,926 |
| | | | | | |
NON-CURRENT | |
|
| |
| |
Tax credits receivables | | |
| 9,154 |
| 8,846 |
Investment - Listed shares | | |
| 625 |
| 1,075 |
Property, plant and equipment | | 6 |
| 66,877 |
| 66,619 |
Intangible assets | | |
| 53 |
| 59 |
Right-of-use assets | | | | 1,767 | | 1,884 |
Deposits | | |
| 2,443 |
| 2,530 |
Total non-current assets | | |
| 80,919 |
| 81,013 |
Total assets | | |
| 175,842 |
| 123,939 |
| | | | | | |
LIABILITIES | |
|
| |
| |
CURRENT | |
|
| |
| |
Accounts payable and other | | 7 |
| 10,618 |
| 9,798 |
Deferred grants | | |
| 1,135 |
| 1,255 |
Convertible notes | | 8 |
| 56,367 |
| 53,624 |
Derivative warrant liability | | 9 | | 19,738 | | — |
Current portion of lease liabilities | | |
| 449 |
| 451 |
Current portion of borrowings | | |
| 747 |
| 480 |
Total current liabilities | | |
| 89,054 |
| 65,608 |
| | | | | | |
NON-CURRENT | | |
| |
| |
Asset retirement obligation | | |
| 938 |
| 987 |
Lease liabilities | | |
| 1,524 |
| 1,636 |
Borrowings | | |
| 953 |
| 1,278 |
Total non-current liabilities | | |
| 3,415 |
| 3,901 |
Total liabilities | | |
| 92,469 |
| 69,509 |
| | | | | | |
EQUITY | |
|
| |
| |
Share capital | | |
| 297,984 |
| 238,823 |
Other reserves | | 8 |
| 8,780 |
| 7,692 |
Contributed surplus | | |
| 29,433 |
| 28,502 |
Deficit | | |
| (252,824) |
| (220,587) |
Total equity | | |
| 83,373 |
| 54,430 |
Total liabilities and equity | | |
| 175,842 |
| 123,939 |
Going Concern | | 1 | | | | |
Commitments | | 18 | | | | |
Subsequent events | | 19 |
|
|
|
|
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, except per share amounts - unaudited)
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
| | | | | | |
| | | | For the three-month periods ended | ||
| | | | March 31, 2024 | | March 31, 2023 |
|
| Notes |
| $ |
| $ |
EXPENSES | | | | | | |
Exploration and evaluation expenses |
| 11 | | 20,223 | | 1,647 |
Battery Material Plant project expenses |
| 12 | | 7,813 | | 4,733 |
General and administrative expenses |
| 13 | | 6,183 | | 6,909 |
Operating loss |
| |
| 34,219 |
| 13,289 |
Net financial costs (income) |
| 14 |
| (2,082) |
| 11,757 |
Loss before tax |
| |
| 32,137 |
| 25,046 |
Income tax |
| |
| 100 |
| 100 |
Net loss and comprehensive loss |
| |
| 32,237 |
| 25,146 |
| | | | | | |
Basic and diluted loss per share |
| |
| 0.43 |
| 0.45 |
Weighted average number of shares outstanding | | | | 75,727,397 | | 56,034,874 |
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 - unaudited)
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
| | | | | | | | | | | | | | |
|
| |
| |
| |
| Contributed |
| For the three-month period ended March 31, 2024 | ||||
| | | | | | | | surplus and | | | ||||
| | | | | | Share capital | | warrants | | Other reserves | | Deficit | | Total equity |
| | Notes | | Number | | $ | | $ | | $ | | $ | | $ |
Balance as at January 1, 2024 | | | | 60,903,898 | | 238,823 | | 28,502 | | 7,692 | | (220,587) | | 54,430 |
Shares issued - Lac Guéret Property acquisition | | 11 | | 6,208,210 | | 18,625 | | — | | — | | — | | 18,625 |
Shares issued from Private Placement | | 9 | | 25,000,000 | | 42,128 | | — | | — | | — | | 42,128 |
Share-based compensation |
| |
| — |
| — |
| 931 |
| — |
| — |
| 931 |
Settlement of interest on Convertible Notes |
| 8 |
| — |
| — |
| — |
| 1,088 |
| — |
| 1,088 |
Share issue costs |
| |
| — |
| (1,592) |
| — |
| — |
| — |
| (1,592) |
Net loss and comprehensive loss |
| |
| — |
| — |
| — |
| — |
| (32,237) |
| (32,237) |
Balance as at March 31, 2024 |
| |
| 92,112,108 |
| 297,984 |
| 29,433 |
| 8,780 |
| (252,824) |
| 83,373 |
| | | | | | | | | | | | | | |
|
| |
| |
| |
| Contributed |
| For the three-month period ended March 31, 2023 | ||||
| | | | | | | | surplus and | | | ||||
| | | | | | Share capital | | warrants | | Other reserves | | Deficit | | Total equity |
| | Notes | | Number | | $ | | $ | | $ | | $ | | $ |
Balance as at January 1, 2023 | | | | 55,873,898 |
| 210,786 |
| 25,313 |
| 829 |
| (164,604) | | 72,324 |
Share-based compensation |
| |
| — |
| — |
| 741 |
| — |
| — |
| 741 |
Settlement of interest on Convertible Notes |
| 8 |
| — |
| — |
| — |
| 1,617 |
| — |
| 1,617 |
Net loss and comprehensive loss |
| |
| — |
| — |
| — |
| — |
| (25,146) |
| (25,146) |
Balance as at March 31, 2023 |
| |
| 55,873,898 |
| 210,786 |
| 26,054 |
| 2,446 |
| (189,750) |
| 49,536 |
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 - unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | | | | |
| | | | For the three-month periods ended | ||
| | | | March 31, 2024 | | March 31, 2023 |
|
| Notes |
| $ |
| $ |
OPERATING ACTIVITIES |
| | | | | |
Net loss |
| | | (32,237) | | (25,146) |
Adjustments for non-cash items: | | | | | | |
Depreciation and amortization |
| | | 2,621 | | 1,157 |
Change in fair value - Listed shares | | | | 450 | | (675) |
Change in fair value - Embedded derivatives | | 8 | | — | | 10,279 |
Change in fair value - Derivative warrant liability | | 9 | | (5,955) | | — |
Interest on convertible notes | | 8 | | 1,759 | | 1,617 |
Lac Gueret Property acquisition | | 11 | | 18,625 | | — |
Unrealized foreign exchange loss (gain) |
| | | 1,412 | | (40) |
Share-based compensation |
| 10.2 | | 854 | | 582 |
Accretion included within financial costs |
| |
| 982 |
| 1,183 |
Net change in working capital |
| 15 |
| (917) |
| 2,229 |
Cash flows used in operating activities |
| |
| (12,406) |
| (8,814) |
| | | | | | |
INVESTING ACTIVITIES |
|
|
| |
| |
Additions to property, plant, and equipment, net of grants |
| 15 |
| (2,308) |
| (1,481) |
Deposits |
| |
| 85 |
| 56 |
Cash flows used in investing activities |
| |
| (2,223) |
| (1,425) |
| | | | | | |
FINANCING ACTIVITIES |
|
|
| |
| |
Proceeds from private placement | | 9 | | 67,870 | | — |
Convertible notes issue costs |
| |
| — |
| (659) |
Repayment of borrowings |
| |
| (58) |
| (155) |
Repayment of lease liabilities | | | | (113) | | — |
Share issue costs |
| |
| (1,256) |
| (62) |
Cash flows from (used in) financing activities |
| |
| 66,443 |
| (876) |
| | | | | | |
Effect of exchange rate changes on cash |
| |
| (113) |
| (11) |
| | | | | | |
Net change in cash and cash equivalents |
| |
| 51,701 |
| (11,126) |
Cash and cash equivalents at the beginning of the period |
| |
| 36,332 |
| 59,924 |
Cash and cash equivalents at the end of the period |
| |
| 88,033 |
| 48,798 |
Non-cash investing and financing activities |
| 15 |
| |
|
|
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”, or “parent 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 (“NYSE”), 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 International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) 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 for the foreseeable future.
During the three-month period ended March 31, 2024, the Company reported a net loss after tax of $32.2 million, cash outflows from operating activities of $12.4 million and an accumulated deficit of $252.8 million and has yet to generate positive cash flows or earnings. Based on all available information about the future, which includes 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.
These circumstances indicate the existence of material uncertainties that cast substantial doubt as to the ability of the Company to continue as a going concern and accordingly, the appropriateness of the use of accounting principles applicable to a going concern. In recognition of these circumstances, the Company completed a private placement for aggregate gross proceeds of $67.9 million (US$50 million), with General Motors Holding LLC (“GM”) and Panasonic Holdings Corporation (“Panasonic”) on February 28, 2024.
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”) applicable to the preparation of interim financial statements, 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, 2023. 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, 2023, which have been prepared in accordance with IFRS.
The condensed consolidated interim financial statements for the three-month period ended March 31, 2024 (including comparative statements) were approved and authorized for publication by the Board of Directors on May 14, 2024.
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. | SIGNIFICANT ACCOUNTING POLICIES |
3.1 | EXPLORATION AND EVALUATION EXPENDITURES |
Exploration and evaluation expenditures are costs incurred during the initial search for mineral resources before the technical feasibility and commercial viability of extracting a mineral resource are demonstrable.
All expenditures relating to exploration and evaluation are expensed as incurred in the consolidated statement of loss and comprehensive loss until the property reaches the development stage. Costs related to exploration and evaluation include topographical, geological, geochemical and geophysical studies, mining claims, exploration drilling, trenching, sampling, research and development costs specific to a mining project and other costs related to the evaluation of the technical feasibility and commercial viability of extracting a mineral resource. The various costs are expensed on a property-by-property basis pending determination of the technical feasibility and commercial viability of extracting a mineral resource.
When the technical feasibility and commercial viability of extracting a mineral resource are demonstrable, exploration and evaluation expenses related to the mining property will be recorded to property and equipment in Mining assets under construction.
3.2 | COMPOUND INSTRUMENTS |
The common shares and the share purchase warrants issued by the Company in connection with the private placement completed with GM and Panasonic are considered a compound financial instrument (refer to note 9). The share purchase warrants are classified as a derivative financial liability as the warrants are issued in a different currency than the Company’s functional currency. The principle known as “fixed for fixed” criterion under IFRS requires that a fixed amount of cash or another financial asset (in this case, the exercise of the share purchase warrants) be exchanged for a fixed number of equity instruments.
Derivative warrant liabilities are financial liabilities recorded at fair value. As at the issuance date, the liability component (derivative warrant liability) of the compound instrument was established by using the Black-Scholes pricing model, and the residual amount, net of the issuance cost, was allocated to the equity component of the financial instrument. The derivative warrant liability is remeasured at the end of each reporting period with subsequent changes in fair value recorded in the consolidated statement of loss and comprehensive loss. At each reporting period, the fair value of the liability related to warrants is determined using the Black-Scholes pricing model, which uses significant input that is not based on observable market data, hence the classification as Level 3 in the fair value hierarchy.
3.3 | CONTINGENT PAYMENTS |
The Company has an additional consideration in connection with the Asset purchase agreement of the Lac Guéret Property which the Company shall pay following the declaration of commercial production of the Uatnan project. The Company has elected not to record payments contingent on future events on day 1 and, therefore, no liability is recognized. The variable payment will be recorded once commercial production of the Uatnan project will occur.
4. | ACCOUNTING STANDARDS ADOPTED AND ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE |
4.1 | NEW ACCOUNTING STANDARDS ADOPTED |
The Company adopted the amendments to IAS 1 Presentation of Financial Statements on classification of liabilities, effective for years beginning after January 1, 2024, which clarify when liabilities are classified as either current or non-current. For the purposes of non-current classification, the amendments removed the requirement for a right to defer settlement or roll over of a liability for at least twelve months to be unconditional.
Additionally, the amendments eliminate the exception related to conversion features. Previously, if conversion features were at the holder's discretion, it did not affect the classification of the liability component of a convertible instrument. In light of this amendment, the Company reclassified the convertibles notes from a non-current to current liability, including the 2023 comparative figures.
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)
4.2 | NEW ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE |
In April 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements to improve reporting of financial performance. IFRS 18 replaces IAS 1 Presentation of Financial Statements. It carries forward many requirements from IAS 1 unchanged. IFRS 18 applies for annual reporting periods beginning on or after January 1, 2027. Earlier application is permitted.
The new Accounting Standard introduces significant changes to the structure of a company's income statement and new principles for aggregation and disaggregation of information. The main impacts of the new Accounting Standard include:
● | Introducing a newly defined "operating profit" subtotal and a requirement for all income and expenses to be allocated between three distinct categories based on the company's main business activities: Operating, investing and financing; |
● | Disclosure about management performance measures; |
● | Adding new principles for aggregation and disaggregation of information; |
● | Requiring the cash flow statement to start with operating profit; and |
● | Remove the accounting policy choice for presentation of dividend and interest. |
5. | 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, and expenses.
Information about the significant estimates and assumptions that have the greatest impact on the recognition and measurement of assets, liabilities, and expenses can be found in the note 5 of the 2023 Consolidated audited annual financial statement, except for the one described below. Actual results may differ significantly.
Fair Value of the Derivative warrant liability
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Company used the Black-Scholes option pricing model in determining the fair value of the derivative warrant liability which requires a number of assumptions to be made, including the volatility, the risk-free interest rate and the expected life. The Company uses its judgment to make assumptions that are mainly based on market conditions existing at the end of each reporting period. Details of the valuation model used for determining the fair value of the warrants and the assumptions used by management are disclosed in note 9.
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. | PROPERTY, PLANT AND EQUIPMENT |
| | | | | | | | | | | | | | | | | | |
|
| |
| |
| | | Furniture |
| |
| |
| Battery Material |
| Bécancour Battery |
| |
| | | | | | | | and other IT | | | | Mine under | | Demonstration Plant | | Material Plant | | |
| | Land |
| Buildings |
| Equipment | | equipment |
| Rolling stock |
| construction [1] | | under construction [1] | | under construction [1] | | Total |
|
| $ |
| $ |
| $ |
| $ |
| $ |
| $ |
| $ |
| $ |
| $ |
COST | | | | | | | | | | | | | | | | | | |
January 1, 2024 | | 2,455 | | 3,438 | | 25,350 | | 235 | | 128 | | 46,000 | | 710 | | - | | 78,316 |
Additions |
| - | | - | | - | | - | | - | | 1,546 | | 1,082 | | 129 | | 2,757 |
Write-Off/Disposals | | - | | - | | - | | - | | (8) | | - | | - | | - | | (8) |
March 31, 2024 |
| 2,455 | | 3,438 | | 25,350 | | 235 | | 120 | | 47,546 | | 1,792 | | 129 | | 81,065 |
ACCUMULATED DEPRECIATION |
| | | | | | | | | | | | | | | | | |
January 1, 2024 |
| - | | 779 | | 10,723 | | 134 | | 61 | | - | | - | | - | | 11,697 |
Depreciation |
| - | | 61 | | 2,419 | | 13 | | 6 | | - | | - | | - | | 2,499 |
Write-Off/Disposals | | - | | - | | - | | - | | (8) | | - | | - | | - | | (8) |
March 31, 2024 |
| - | | 840 | | 13,142 | | 147 | | 59 | | - | | - | | - | | 14,188 |
Net book value as at March 31, 2024 |
| 2,455 | | 2,598 | | 12,208 | | 88 | | 61 | | 47,546 | | 1,792 | | 129 | | 66,877 |
| | | | | | | | | | | | | | | | |
|
| |
| |
| | | Furniture |
| |
| |
| Battery Material |
| |
| | | | | | | | and other IT | | | | Mine under | | Demonstration Plant | | |
| | Land |
| Buildings |
| Equipment | | equipment |
| Rolling stock |
| construction [1] | | under construction [1] | | Total |
|
| $ |
| $ |
| $ |
| $ |
| $ |
| $ |
| $ |
| $ |
COST | | | | | | | | | | | | | | | | |
January 1, 2023 | | 2,455 | | 3,267 | | 9,813 | | 259 | | 128 | | 37,785 | | 14,591 | | 68,298 |
Additions |
| - | | 171 | | 398 | | - | | - | | 8,215 | | 1,258 | | 10,042 |
Transfers | | - | | - | | 15,139 | | - | | - | | - | | (15,139) | | - |
Write-Off/Disposals |
| - | | - | | - | | (24) | | - | | - | | - | | (24) |
December 31, 2023 |
| 2,455 | | 3,438 | | 25,350 | | 235 | | 128 | | 46,000 | | 710 | | 78,316 |
ACCUMULATED DEPRECIATION |
| | | | | | | | | | | | | | | |
January 1, 2023 |
| - | | 551 | | 3,478 | | 97 | | 37 | | - | | - | | 4,163 |
Depreciation |
| - | | 228 | | 7,245 | | 56 | | 24 | | - | | - | | 7,553 |
Write-Off/Disposals |
| - | | - | | - | | (19) | | - | | - | | - | | (19) |
December 31, 2023 |
| - | | 779 | | 10,723 | | 134 | | 61 | | - | | - | | 11,697 |
Net book value as at December 31, 2023 |
| 2,455 | | 2,659 | | 14,627 | | 101 | | 67 | | 46,000 | | 710 | | 66,619 |
[1] | Assets under construction are not being depreciated as they are not in the condition necessary to be capable of being operated in the manner intended by management. |
The amount of borrowing costs included in Mine under construction for the three-month period ended March 31, 2024, is $444 ($56 for the three-month period ended March 31, 2023). The rate used to determine the amount of borrowing costs to be capitalized is the weighted average interest rate applicable to the entity’s general borrowings during the three-month period ended March 31, 2024.
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)
7. | ACCOUNTS PAYABLE AND OTHER |
| | | | |
|
| March 31, 2024 |
| December 31, 2023 |
| | $ | | $ |
Trade payable and accrued liabilities |
| 7,979 | | 7,047 |
Wages and benefits liabilities |
| 1,958 | | 2,751 |
Interest payable | | 681 | | - |
Accounts payable and other |
| 10,618 | | 9,798 |
8. | CONVERTIBLE NOTES |
US$50 Million Convertible Notes with Mitsui, Pallinghurst, and Investissement Québec
| | | | | | | | |
|
| Host (amortized cost) |
| Derivative (FVTPL) |
| Deferred amount |
| Total |
| | $ | | $ | | $ | | $ |
Issuance [1] | | 48,703 | | 20,453 | | (2,773) | | 66,383 |
Interest accretion |
| 732 |
| — |
| — |
| 732 |
Fair value adjustment |
| — |
| (11,199) |
| — |
| (11,199) |
Amortization |
| — |
| — |
| 140 |
| 140 |
Foreign exchange |
| 382 |
| 127 |
| (21) |
| 488 |
Balance as of December 31, 2022 | | 49,817 | | 9,381 | | (2,654) | | 56,544 |
Interest accretion |
| 5,082 |
| — |
| — |
| 5,082 |
Fair value adjustment |
| — |
| (8,049) |
| — |
| (8,049) |
Amortization |
| — |
| — |
| 1,453 |
| 1,453 |
Foreign exchange |
| (1,275) |
| (163) |
| 32 |
| (1,406) |
Balance as of December 31, 2023 |
| 53,624 |
| 1,169 |
| (1,169) |
| 53,624 |
Interest accretion |
| 1,421 |
| — |
| — |
| 1,421 |
Fair value adjustment |
| — |
| (1,037) |
| — |
| (1,037) |
Amortization [2] |
| — |
| — |
| 1,037 |
| 1,037 |
Foreign exchange |
| 1,322 |
| 29 |
| (29) |
| 1,322 |
Balance as of March 31, 2024 |
| 56,367 |
| 161 |
| (161) |
| 56,367 |
[1] Transaction costs of $821 (US$608) have been allocated to the host instrument and reduced from the net proceeds allocated to this component.
[2] The amortization for the three-month period ended March 31, 2024 includes an additional amount of $938 to prevent the net amount of the Derivative and the Deferred amount components from representing a negative amount.
On November 8, 2022, the Company completed a private placement of unsecured convertible notes (the “Notes”) for aggregate gross proceeds of $67.2 million (US$50 million). The Notes are denominated in U.S. Dollars with a term of 36 months and carry a quarterly coupon interest payment of the greater of the 3-month CME Term SOFR plus 4% and 6%.
Subsequently and effective January 1, 2023, the Notes contracts were amended by:
- | Removing the interest capitalization provisions, such that accrued interest will be deemed paid in full in shares each quarter following the TSXV’s approval; and |
- | Increasing the interest rate to the greater of the 3-month CME Term SOFR plus 5% and 7%. |
The Notes include the following material conversion and settlement options available to the holders and the Company:
- | General conversion option: The holder of a Note, at any time before maturity, can convert the outstanding principal amount into units for US$5/unit. Each unit comprises one common share of the Company and one share warrant. The share warrant can be used to subscribe one common share of the Company at an exercise price of US$5.70/share for a period of 24 months from the date of conversion of the Note. |
- | Repurchase option: The Company has, at its sole discretion, an option to repay the Notes at the Repurchase Amount (as defined in the subscription agreement) at the earlier of (i) December 31, 2023; or (ii) the date of a final investment decision (FID) as defined in the subscription agreement. Depending on the circumstances, the repurchase amount is affected by the remaining time to maturity and the cumulative interest paid to date to the Holders. |
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)
- | Interest repayment option: Quarterly, the Company has an option to pay the interest due in (i) cash; or (ii) in Common Shares subject to the TSXV’s approval, by delivering share certificates to the Holders upon maturity, conversion or redemption at a U.S. Dollar equivalent of the Company’s TSXV market share price, determined at the quarter end on which such interest became payable. |
- | The Notes also include redemption mechanisms in favor of the holders in the event of a change of control or an event of default. |
For the three-month period ended March 31, 2024, the interest coupon totalled an aggregate amount of $1,759 (US$1,304) ($1,617 (US$1,196) for the three-month period ended March 31, 2023). Of the total interest coupon, $671 (US$498) is recorded as interest payable, which corresponds to the accrued interest calculated between February 15, 2024 and March 31, 2024 of Pallinghurst and Mitsui notes, while the remaining balance of $1,088 (US$807) represents the interest coupon that the Company elected to pay with 373,977 common shares, which will be issued at maturity or conversion of the Notes. The common shares to be issued are recorded as other reserves in the consolidated statements of changes in equity.
On February 14, 2024, the Company secured a private placement with Mitsui and Pallinghurst to surrender and cancel their convertible notes. This transaction was subject to approvals and requirements of Regulation 61-101 respecting Protection of Minority Security Holders in Special Transactions which was held in a special meeting of the shareholders on May 1, 2024. All required approvals were obtained, therefore the private placement closed on May 2, 2024. For more details on the transaction refer to Note 19 - Subsequent events.
Below is a sensitivity analysis on inputs impacting the fair value revaluation of the derivative.
| | | | | | | | | | | | |
|
| |
| Reasonably |
| Sensitivity [1] |
| |
| Reasonably |
| Sensitivity [1] |
| | December 31, 2023 | | possible change | | US$ (Derivative liability) | | March 31, 2024 | | possible change | | US$ (Derivative liability) |
Observable inputs | |
| |
| |
| |
| |
| |
|
Share price |
| US$2.61 | | +/- 10% | | +0.4M/-0.3M |
| US$2.29 | | +/- 10% | | +0.3M/-0.1M |
Foreign Exchange rate |
| 1.32 | | +/-5% | | +/-0.1M |
| 1.36 | | +/-5% | | +/-0M |
Unobservable inputs |
| | |
| |
|
| | |
| | |
Expected volatility |
| 48% | | +/- 10% | | +0.1/-0.3M |
| 48% | | +/- 10% | | +0.2/0M |
Credit spread |
| 5% | | +/-5% | | +/-0.03M |
| 4% | | +/-5% | | +/-0.01M |
[1]Holding all other variables constant.
9. | DERIVATIVE WARRANT LIABILITY |
| | |
|
| Derivative warrant liability |
| | $ |
Issuance | | 25,742 |
Fair value adjustment |
| (5,955) |
Foreign exchange |
| (49) |
Balance as of March 31, 2024 | | 19,738 |
On February 28, 2024, the Company completed a private placement, with GM and Panasonic. Each party subscribed for 12,500,000 Common Shares and 12,500,000 warrants. The 25,000,000 common shares and warrants were issued for aggregate gross proceeds of $67.9 million (US$50 million).
The warrants are exercisable in connection with the Tranche 2 Investment at the final investment decision (“FID”) or at latest on February 28, 2029. Each Warrant will entitle the holder to acquire one Common Share (a “Warrant Share”) at a price equal to US$2.38 per Warrant Share.
The transaction represents a compound financial instrument that is accounted for based on the residual method under IAS 32 Financial Instruments: Presentation. The liability component which represents the warrants was evaluated based on the Black-Scholes option pricing model and totalled $25.8M (US$19M). The residual balance of $42.1M (US$31M) was then allocated to the equity component (common shares issued). The transaction costs of $2.4M were allocated proportionally between the financial liability and the equity component. Transaction costs allocated to the equity component were accounted for as a deduction from equity. Transaction costs allocated to the warrants were recorded directly in the consolidated statement of loss and comprehensive loss.
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)
The following assumptions were used to estimate the fair value of the derivative warrant liability:
| | | | |
| | March 31, 2024 | | February 28, 2024 |
Number of Warrants |
| 25,000,000 | | 25,000,000 |
Risk-Free Interest Rate |
| 5.16% | | 5.10% |
Expected Volatility |
| 75% | | 71% |
Stock Price at Valuation Date |
| US$2.29 | | US$2.55 |
Exercise Price |
| US$2.38 | | US$2.38 |
Average Fair Value per Warrant |
| US$0.58 | | US$0.76 |
The main non-observable input used in the model is the expected volatility. An increase or decrease in the expected volatility used in the model of 10% would have resulted in an increase of $1,867 and a decrease of $1,893 respectively in the fair value of the warrants as at March 31, 2024.
10. | EQUITY |
10.1 SHARE CAPITAL
Authorized share capital
Unlimited number of common shares voting and participating, with no par value. All issued ordinary shares are fully paid.
| | | | |
| | For the three-month periods ended | | For the years ended |
|
| March 31, 2024 |
| December 31, 2023 |
Shares issued at the start of the period |
| 60,903,898 |
| 55,873,898 |
Shares issued from offering |
| — |
| 4,850,000 |
Shares issued - Lac Gueret Property acquisition (Note 11) | | 6,208,210 | | — |
Shares issued from Private Placement (Note 9) | | 25,000,000 | | — |
Options exercised | | — |
| 180,000 |
Shares issued at the end of period |
| 92,112,108 | | 60,903,898 |
On April 17, 2023, the Company concluded an underwritten public offering agreement for 4,850,000 common shares, at a price of US$4.55 per share for gross proceeds of $29.6M (US$22M). The offering was conducted on a bought deal basis and the Company incurred underwriter fees equal to 6% of the gross proceeds.
10.2 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 three-month period ended March 31, 2024 | | For the year ended December 31, 2023 | ||||
| | | | Weighted average | | | | Weighted average |
| | | | exercise price | | | | exercise price |
| | Number | | $ | | Number | | $ |
Opening balance | | 4,908,548 | | 6.79 | | 3,911,804 | | 7.42 |
Granted | | - | | — | | 2,088,548 | | 5.51 |
Exercised | | - |
| — |
| (180,000) |
| 3.20 |
Expired | | (161,000) |
| 8.47 |
| (337,000) |
| 6.52 |
Forfeited | | (23,000) |
| 4.77 |
| (87,000) |
| 5.39 |
Cancelled | | - |
| — |
| (487,804) |
| 8.20 |
Ending balance | | 4,724,548 |
| 6.74 |
| 4,908,548 |
| 6.79 |
Options that can be exercised | | 2,723,000 |
| 7.62 |
| 2,824,000 |
| 7.64 |
11
NOUVEAU MONDE GRAPHITE INC.
Notes to the condensed consolidated interim financial statements
(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)
11. | EXPLORATION AND EVALUATION EXPENSES |
| | | | |
| | For the three-month periods ended | ||
| | March 31, 2024 |
| March 31, 2023 |
| | $ | | $ |
Wages and benefits | | 1,051 | | 815 |
Share-based compensation |
| 138 | | 79 |
Consulting fees |
| 21 | | 175 |
Materials, consumables, and supplies |
| 151 | | 166 |
Maintenance and subcontracting |
| 112 | | 204 |
Utilities |
| 88 | | 104 |
Depreciation and amortization |
| 64 | | 73 |
Other |
| 41 | | 65 |
Uatnan Mining Project | | 18,648 | | 95 |
Grants |
| (18) | | (54) |
Tax credits |
| (73) | | (75) |
Exploration and evaluation expenses |
| 20,223 |
| 1,647 |
On January 31, 2024, the Company completed the acquisition of the Lac Guéret property with Mason Resources Inc (“Mason”) through an asset acquisition agreement consisting mainly of 74 map-designated claims. The consideration for the asset acquisition was paid with 6,208,210 common shares of the Company, at $3.00 per share, representing a total aggregated amount of $18.6 million. The Company performed the concentration test and concluded that the acquisition represents an asset acquisition and not a business acquisition, since substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. Mining rights are specifically excluded from the scope of IAS 16, therefore, the Company applied IFRS 6. Since the Company’s accounting policy for Exploration and Evaluation activities under IFRS 6 is to classify expenditures in the consolidated statement of loss and comprehensive loss, $18.6 million was expensed under the category “Uatnan Mining Project”. A subsequent payment of $5,000,000 will be made to Mason at the start of commercial production of the contemplated Uatnan Mining Project, which will be recorded once commercial production of the Uatnan project will occur.
12. | BATTERY MATERIAL PLANT PROJECT EXPENSES |
| | | | |
|
| For the three-month periods ended | ||
| | March 31, 2024 |
| March 31, 2023 |
| | $ | | $ |
Wages and benefits | | 1,269 | | 908 |
Share-based compensation |
| 59 | | 75 |
Engineering |
| 2,619 | | 1,519 |
Consulting fees |
| 157 | | 203 |
Materials, consumables, and supplies |
| 666 | | 600 |
Maintenance and subcontracting | | 661 | | 396 |
Utilities |
| 189 | | 214 |
Depreciation and amortization |
| 2,497 | | 1,021 |
Other |
| 54 | | 34 |
Grants |
| (124) | | (237) |
Tax credits |
| (234) | | — |
Battery Material Plant project expenses |
| 7,813 |
| 4,733 |
12
NOUVEAU MONDE GRAPHITE INC.
Notes to the condensed consolidated interim financial statements
(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)
13. | GENERAL AND ADMINISTRATIVE EXPENSES |
| | | | |
| | For the three-month periods ended | ||
| | March 31, 2024 | | March 31, 2023 |
|
| $ |
| $ |
Wages and benefits | | 1,863 | | 2,062 |
Share-based compensation | | 657 | | 429 |
Professional fees | | 1,435 | | 1,032 |
Consulting fees | | 464 | | 755 |
Travelling, representation and convention | | 120 | | 210 |
Office and administration | | 1,542 | | 2,226 |
Stock exchange, authorities, and communication | | 84 | | 126 |
Depreciation and amortization | | 60 | | 63 |
Other financial fees | | 4 | | 6 |
Grants | | (46) | | — |
General and administrative expenses | | 6,183 |
| 6,909 |
14. | NET FINANCIAL COSTS (INCOME) |
| | | | |
|
| For the three-month periods ended | ||
| | March 31, 2024 |
| March 31, 2023 |
|
| $ |
| $ |
Foreign exchange loss (gain) | | 1,403 | | (31) |
Interest income |
| (752) | | (636) |
Interest expense on lease liabilities |
| 4 | | 5 |
Change in fair value - Listed shares | | 450 | | (675) |
Change in fair value - Embedded derivative and deferred amount amortization | | — | | 10,279 |
Change in fair value - Derivative warrant liability | | (5,955) | | — |
Accretion on borrowings and notes |
| 982 | | 1,183 |
Interest on borrowings and notes | | 1,786 | | 1,632 |
Net financial costs (income) |
| (2,082) |
| 11,757 |
15. | ADDITIONAL CASH FLOW INFORMATION |
| | | | | | |
| | | | For the three-month periods ended | ||
| | | | March 31, 2024 |
| March 31, 2023 |
| | | | $ | | $ |
Grants receivable and other current assets |
| |
| 133 |
| 130 |
Deferred grants |
| |
| (120) |
| 25 |
Mining tax credits |
|
|
| (120) |
| (75) |
Sales taxes receivable |
|
|
| (439) |
| 519 |
Prepaid expenses |
|
|
| 558 |
| 1,535 |
Accounts payable and other |
| |
| (929) |
| 95 |
Total net change in working capital |
|
|
| (917) |
| 2,229 |
| | | | | | |
Income tax received |
|
|
| 188 |
| — |
Interest paid |
|
|
| 17 | | 14 |
| | | | | | |
Non-cash financing activities |
|
|
| |
| |
Deferred expenses included in accounts payable and accrued liabilities | | | | 924 | | 87 |
Share issue costs included in accounts payable and accrued liabilities | | | | 336 | | — |
13
NOUVEAU MONDE GRAPHITE INC.
Notes to the condensed consolidated interim financial statements
(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)
Reconciliation of additions presented in the property, plant and equipment schedule to the net cash used in investing activities
| | | | | | |
| | | | For the three-month periods ended | ||
| | | | March 31, 2024 |
| March 31, 2023 |
| | | | $ | | $ |
Additions of property, plant and equipment as per note 6 |
| |
| 2,757 |
| 2,624 |
Non-cash decrease (increase) of the asset rehabilitation obligation |
| |
| 54 |
| (20) |
Borrowing costs included in Mine under construction |
|
|
| (444) |
| (56) |
Share-based compensation capitalized (non-cash) |
|
|
| (77) |
| (159) |
Grants recognized |
|
|
| 1 |
| (25) |
Grants received | | | | (104) | | (2,743) |
Accounts payable variation related to property, plant and equipment |
| |
| 121 |
| 1,860 |
Net cash flow used in investing activities - purchase of property, plant and equipment |
|
|
| 2,308 |
| 1,481 |
16. | RELATED PARTY TRANSACTIONS |
The Company considers its directors and officers to be key management personnel. Transactions with key management personnel are set out as follows:
| | | | |
| | For the three-month periods ended | ||
| | March 31, 2024 | | March 31, 2023 |
|
| $ |
| $ |
Key management compensation |
|
|
|
|
Employee benefit expenses |
| 550 |
| 715 |
Share-based payments |
| 436 |
| 107 |
Board fees |
| 224 |
| 229 |
During the three-month period ended March 31, 2024, the Company incurred interest fees of $1,759 (US$1,304) ($1,617 (US$1,196) for the three-month period ended March 31, 2023) to Investissement Québec and Pallinghurst, as disclosed above in Note 8 – Convertible Notes.
17. | FINANCIAL INSTRUMENTS AND RISK MANAGEMENT |
FAIR VALUE
Current financial assets and financial liabilities are valued at their carrying amounts, which are reasonable estimates of their fair value due to their relatively short-maturities; this includes cash and cash equivalents, other receivables and accounts payable and accrued liabilities. Borrowings and the convertible debt host are accounted for at amortized cost using the effective interest method, and their fair value approximates their carrying value except for the convertible debt host for which fair value is estimated at $68,788 (US$50,766) as at March 31, 2024 ($66,227 and US$50,073 as at December 31, 2023) (level 3).
Fair Value Hierarchy
Subsequent to initial recognition, the Company uses a fair value hierarchy to categorize the inputs used to measure the financial instruments at fair value grouped into the following levels based on the degree to which the fair value is observable.
- | Level 1: Inputs derived from quoted prices (unadjusted) in active markets for identical assets or liabilities; |
- | Level 2: Inputs derived from other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and |
- | Level 3: Inputs that are not based on observable market data (unobservable inputs). |
14
NOUVEAU MONDE GRAPHITE INC.
Notes to the condensed consolidated interim financial statements
(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)
| | | | | | | | |
| | As at March 31, 2024 | ||||||
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
Financial Assets at FVTPL | | | | | | | | |
Non-current investments (Equity investment in publicly listed entities) |
| 625 |
| — |
| — |
| 625 |
Financial liabilities at FVTPL |
|
|
|
|
|
|
|
|
Convertible notes - Embedded derivatives (note 8) |
| — |
| — |
| — |
| — |
Warrants (note 9) |
| — |
| — |
| 19,738 |
| 19,738 |
| | | | | | | | |
| | As at December 31, 2023 | ||||||
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
Financial Assets at FVTPL | | | | | | | | |
Non-current investments (Equity investment in publicly listed entities) |
| 1,075 |
| — |
| — |
| 1,075 |
Financial liabilities at FVTPL |
|
|
|
|
|
|
|
|
Convertible notes - Embedded derivatives (note 8) |
| — |
| — |
| — |
| — |
There were no transfers between Level 1, Level 2 and Level 3 during the three-month period ended March 31, 2024 (none in 2023).
Financial Instruments Measured at FVTPL
Non-Current investments
Equity instruments publicly listed are classified as a Level 1 in the fair value hierarchy. Their fair values are a recurring measurement and are estimated using the closing share price observed on the relevant stock exchange.
18. | COMMITMENTS |
In the normal course of business, the Company enters into contracts that give rise to commitments. As at March 31, 2024, the Company had issued $2,906 of purchase orders for the acquisition of property, plant and equipment and $3,303 in relation to operations.
19. | SUBSEQUENT EVENTS |
On May 2, 2024, the Company closed the private placements with Mitsui and Pallinghurst for the surrender and cancellation of their convertible notes dated November 8, 2022. The Company has received the required regulatory approvals and shareholder approval as per the requirements of Regulation 61-101 respecting Protection of Minority Security Holders in Special Transactions. The Company issued 18,750,000 Common Shares and 18,750,000 Warrants to Mitsui and Pallinghurst, for a total value of US$37.5 million in accordance with the private placement. Additionally, the Company issued a total of 1,579,043 Common Shares representing the interest coupons that the Company previously elected to pay in common shares, which represent the interest from November 8, 2022 to February 14, 2024 (signature of the subscription agreement).
15