The following discussion and analysis should be read in conjunction with our
unaudited condensed interim consolidated financial statements as of, and for the
three months ended
All currency amounts are stated in thousands of
As used in this report, unless the context otherwise indicates, references to
"we," "our," the "Company," "NioCorp," and "us" refer to
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 theElk 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 establishment of a reserve and resource for rare earth elements and the development of a viable recovery process for rare earth elements; ? 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 inU.S. and Canadian reserve and resource reporting; ? risks related to our exploration activities being unsuccessful; ? risks related to our ability to obtain permits and licenses for production; 13 ? 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 management of the water balance at our Elk Creek Project; ? 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 theU.S. Internal Revenue Code of 1986, as amended; ? risks related to our Common Shares, including price volatility, lack of dividend payments, dilution and penny stock rules; ? risks related to our status as an "emerging growth company" and the impact of related reduced reporting requirements on our ability to attract investors; and ? 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
The Company's forward-looking statements contained in this Quarterly Report on Form 10-Q are based on the beliefs, expectations, and opinions of management as of the date of this report. The Company does not assume any obligation to update forward-looking statements if circumstances or management'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
14 Company Overview
NioCorp is developing the
Our primary business strategy is to advance our
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 did not have more than
We will lose our status as an emerging growth company on
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, management's assessment of its internal controls. ? 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"), require companies to hold shareholder advisory votes on executive compensation and golden parachute compensation.
Because we will lose our status as an emerging growth company as of
COVID-19
Since
15
resume. We believe this could have an adverse impact on our ability to obtain
financing, development plans, results of operations, financial position, and
cash flows during the current fiscal year. As a result of the COVID-19 pandemic,
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
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
On
Elk Creek Project Update
On
On
The metallurgical work was conducted by
This new metallurgical testing program is the next step in NioCorp's goal of
implementing the optimization recommendations in the 2019 Feasibility Study for
the production of niobium, scandium, and titanium, as well as to demonstrate the
potential extraction and recovery of REEs from the ore that NioCorp expects to
mine from the
L3's process optimization work also includes extensive efforts to re-use and
recycle key reagents from NioCorp's planned hydrometallurgical plant, which
further NioCorp's goal of maximizing the environmentally efficient operation of
the Elk Creek mine and processing facility, following the receipt of necessary
project funding and construction of the mine and processing facility. We expect
that L3's work will continue in the coming quarters and will include the
construction and subsequent operation of a small-scale demonstration plant at
their lab facility in
On
16
On
On
During the quarter ended
Other Activities
Our long-term financing efforts continued during the quarter ended
? Continuation of the Company's efforts to secure federal, state and local permits; ? Continued evaluation of the potential to produce rare earth products; ? Negotiation and completion of engineering, procurement and construction agreements; ? Completion of the final detailed engineering for the underground portion of theElk Creek Project ; ? Initiation and completion of the final detailed engineering for surface project facilities; ? Construction of natural gas and electrical infrastructure under existing agreements to serve theElk 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; ? Initiation of long-lead equipment procurement activities; and ? Construction and operation of a small-scale demonstration plant to address process recommendations contained in the 2019 Feasibility Study and REE unit operations.
Financial and Operating Results
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 September 30, 2021 2020 Operating expenses Employee-related costs$ 319 $ 319 Professional fees 90 108 Exploration expenditures 621 225 Other operating expenses 226 411 Total operating expenses 1,256 1,063 Change in financial instrument fair value - (34 ) Foreign exchange loss (gain) 210 (101 ) Interest expense 492 127 Loss (gain) on equity securities 2 (2 ) Income tax expense - - Net Loss$ 1,960 $ 1,053 17
Three months ended
Significant items affecting operating expenses are noted below:
Professional fees declined slightly in 2021 as compared to 2020, primarily due to the timing of legal services and tax preparation costs.
Exploration expenditures increased in 2021 as compared to 2020, reflecting costs incurred in connection with process optimization and REE assay analysis activities.
Other operating expenses include investor relations, general office expenditures, equity offering and proxy expenditures, board-related expenditures and other miscellaneous costs. These costs decreased in 2021 as compared to 2020 primarily due to director options issued in 2020, which were fully vested and expensed on the grant date, offset slightly by increased financial advisory fees incurred in 2021.
Other significant items impacting the change in the Company's net loss are noted below:
Foreign exchange (gain) loss is primarily due to changes in the
Interest expense increased in 2021 as compared to 2020 primarily due to the
accretion of the Nordmin Note, which was issued in
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, the exercise of incentive stock options and share purchase warrants, 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 could 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 interests. However, we cannot provide any assurances that we will be able to be successful in raising such funds.
As of
We expect that the Company will operate at a loss for the foreseeable future.
The Company's current planned operational needs are approximately
The Company anticipates that it may not have sufficient cash to continue to fund
basic operations for the next twelve months, and additional funds totaling
18
the project in the areas of financing, permitting, and detailed engineering. 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 property lease commitments are
We currently have no further funding commitments or arrangements for additional financing at this time, other than the potential exercise of options 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 management as opportunities to raise funds arise. Management is currently pursuing 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 units 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 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.
Based on the conditions described within, management has concluded and the audit
opinion and notes that accompany our financial statements for the year ended
We have no exposure to any asset-backed commercial paper. Other than cash held
by our subsidiaries for their immediate operating needs in
Operating Activities
During the three months ended
19 Financing Activities
Financing inflows were
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 to finance its activities. The Company may pursue additional debt and/or equity financing in the medium 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
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, development and
construction of the
Contractual Obligations
There 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 "Contractual Obligations" as of
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
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
20
Certain
The Company has been a "passive foreign investment company" ("PFIC") as defined
under Section 1297 of the
Other
The Company has one class of shares, being Common Shares. A summary of
outstanding shares, share options, warrants, and convertible debt option as of
Common Shares Outstanding (fully diluted) Common Shares 261,480,164 Stock options1 15,025,000 Warrants1 13,470,118 Convertible Debt2 12,205,882
1 Each exercisable into one Common Share
2 Represents Common Shares issuable on conversion of aggregate outstanding
principal amounts of
assuming a market price per Common Share of
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