NIOCORP DEVELOPMENTS LTD current report, 18 December 2020

Business Context and Reporting Period

Company: NioCorp Developments Ltd.
Filing Type: Form 8-K (Current Report)
Date of Report: December 18, 2020
Event: Entry into a Material Definitive Agreement and creation of a direct financial obligation with Nordmin Engineering Ltd. ("Nordmin").

Key Financial Metrics and Transaction Details

  • Convertible Note Principal: Approximately $1.872 million USD.
  • Subscription Price: Approximately $1.804 million USD (set off against amounts owed to Nordmin for past services).
  • Warrants Issued: 500,000 common share warrants.
  • Immediate Conversion: 836,551 Common Shares issued upon conversion of $450,000 principal at C$0.684 per share.
  • Note Interest Rate: 5% per annum (implied).
  • Note Maturity: December 18, 2021.
  • Warrant Exercise Price: C$0.80 per share.
  • Warrant Expiry: December 18, 2022.

Material Changes and Terms

The Company entered into a Convertible Note and Warrant Subscription Agreement to settle past service obligations. Key terms include:

  • Conversion Terms: The Note is convertible into up to 4,500,000 Common Shares at 92% of the five-day volume weighted average price on the Toronto Stock Exchange at the time of conversion.
  • Restrictions: Limits exist on the principal amount convertible in any 30-day period.
  • Prepayment: The Company may prepay the Note in whole or part with three days' notice. Nordmin may accelerate maturity upon an event of default.
  • Equity Status: Shares underlying the Note and Warrants are fully paid, non-assessable, and rank equally with existing Common Shares.

Guidance, Risks, and Unusual Items

Unregistered Sales: The securities were issued pursuant to Section 4(a)(2) of the Securities Act of 1933 based on representations and warranties from Nordmin.
Risks: The transaction increases the Company's debt obligations and potential equity dilution. The ability to convert is subject to market price fluctuations (92% of VWAP) and 30-day conversion caps.
Management Commentary: The filing does not provide specific forward-looking guidance or management commentary beyond the terms of the agreement.

Investor Verification Checklist

  • Verify the exact amount of debt owed to Nordmin for "past services" to confirm the $1.804 million set-off calculation.
  • Review the full text of the Subscription Agreement (Exhibit 10.1) for specific "events of default" that could trigger immediate repayment.
  • Monitor the Company's cash flow to assess its ability to service the 5% interest or prepay the note if conversion is restricted.
  • Track the 30-day conversion limits to understand the potential pace of equity dilution.