Business Context and Reporting Period
Company: NioCorp Developments Ltd.
Filing Date: January 26, 2023
Reporting Period: Current Report (Form 8-K) regarding events on January 26, 2023.
Context: NioCorp entered into definitive financing agreements with Yorkville Advisors Global, LP ("Yorkville") in connection with its proposed business combination with GX Acquisition Corp. II ("GXII"). The financings are contingent upon the closing of the business combination.
Key Financial Metrics and Capital Structure
This filing details new capital commitments rather than historical operating results. No revenue, profit, or cash flow data is provided in this document.
- Total Potential Capital Access: Up to $80,360,000 (before fees and expenses).
- Convertible Debt Component: Up to $16,000,000 aggregate principal amount of unsecured convertible debentures.
- Equity Facility Component: Standby equity purchase facility for up to $65,000,000 over 36 months.
- Debt Terms: 5.0% simple interest per annum (increases to 15.0% upon default); 18-month term (extendable by 6 months).
- Equity Facility Fees: $1,500,000 cash fee ($500,000 at closing, remainder over 12 months) plus issuance of $650,000 worth of common shares for no additional consideration.
- Equity Pricing: Shares sold under the facility at 97% of the Volume-Weighted Average Price (VWAP).
Material Changes and Agreements
The primary material change is the execution of two definitive financing agreements:
- Yorkville Convertible Debt Financing:
- Initial advance of $9,600,000 for $10,000,000 principal debentures at closing.
- Additional advance of $5,760,000 for $6,000,000 principal debentures at NioCorp's election (subject to registration statement filing).
- Includes Financing Warrants exercisable after 6 months, expiring monthly over 12 months.
- Contains "Triggered Principal Amount" redemption clauses requiring monthly cash payments if 95% of allowable shares are issued or if registration statements are delayed.
- Yorkville Equity Facility Financing:
- Commitment period of up to 36 months post-closing.
- Maximum of two advances per month while convertible debentures are outstanding.
- Subject to beneficial ownership limits and exchange listing rules.
Guidance, Outlook, and Risks
Use of Proceeds: Funds are intended to launch construction of the Elk Creek Project, move it to commercial operation, and satisfy transaction fees/expenses related to the GXII merger.
Conditions Precedent: Completion of financings is subject to:
- Closing of the business combination with GXII.
- Approval by the Toronto Stock Exchange (TSX).
- Shareholder approval of NioCorp.
Risks and Contingencies:
- Termination Risks: Agreements terminate automatically if the business combination with GXII is terminated. Investors may terminate the debt agreement if the first closing does not occur by March 22, 2023.
- Termination Fees: NioCorp must pay a $1,600,000 cash termination fee if it terminates the debt agreement prior to closing.
- Forward-Looking Uncertainties: Risks include failure to obtain regulatory/shareholder approvals, higher-than-expected redemptions by GXII shareholders, commodity price volatility, and the speculative nature of mineral exploration.
Investor Verification Checklist
- Verify the status of the proposed business combination with GX Acquisition Corp. II (GXII) and the likelihood of closing by March 22, 2023.
- Confirm the filing and effectiveness of the Convertible Debt Financing Registration Statement and Equity Facility Financing Registration Statement with the SEC.
- Monitor the potential dilution impact from the conversion of debentures and the exercise of warrants, noting the 90% VWAP conversion price and 97% equity facility pricing.
- Assess the liquidity impact of the $1,500,000 cash fee and potential monthly redemption obligations under the "Triggered Principal Amount" clause.
- Review the definitive joint proxy statement/prospectus for details on shareholder voting requirements and redemption rights of GXII public shareholders.