NioCorp Developments Ltd. — Form 10-Q Summary
Reporting period: Quarter and nine months ended March 31, 2022 (fiscal Q3 2022). The request metadata says “2021 Q3,” but the filing covers March 31, 2022. Amounts below are in U.S. dollars, in thousands, unless stated otherwise.
Business context and results
NioCorp is an exploration-stage company developing the Elk Creek niobium, scandium and titanium project in Nebraska, while also evaluating potential rare earth products. It had no operating revenue or mining production. It expects to operate at a loss for the foreseeable future.
| Metric | Three months ended Mar. 31, 2022 | Nine months ended Mar. 31, 2022 | Prior-year comparable |
|---|---|---|---|
| Revenue | None | None | None |
| Operating expenses | $1,386 | $5,670 | $845; $3,121 |
| Net loss | $1,816 | $7,234 | $1,013; $3,147 |
| Loss per common share | $0.01 | $0.03 | $0.00; $0.01 |
| Cash used in operating activities | Not separately reported | $4,414 | $3,648 |
No operating margin is applicable because the company had no revenue. Nine-month exploration expenditures were $1,957, versus $711 in the prior-year period. Interest expense rose to $1,457 from $612; share-based compensation and debt accretion were significant noncash items.
Financial position and liquidity
- Cash was $3,464 at March 31, 2022, down from $7,317 at June 30, 2021. Total assets were $21,096; total liabilities were $5,428; shareholders’ equity was $15,668.
- Working capital was in deficit by $1,379, compared with a $3,423 surplus at June 30, 2021. Current liabilities were $5,384.
- Debt included a $2,000 related-party loan from the CEO, bearing 10% interest and secured by company assets, and $2,585 of current Lind III convertible debt. The related-party facility maturity had been extended to June 30, 2022. The Nordmin note was fully converted.
- Financing activities provided $655 during the nine months, compared with $11,917 in the prior-year period. The company also converted $6,622 of debt into shares; common shares outstanding increased to 268.1 million from 256.4 million at June 30, 2021.
Changes, outlook and risks
- Nine-month net loss more than doubled year over year, while operating cash use increased. Management attributed higher costs mainly to exploration and process-development work, increased share-based compensation, professional fees, and financing-related advisory and investor-relations costs.
- Management estimated planned cash needs of approximately $4.2 million through June 30, 2022, and said an additional $5.5 million to $6.25 million would likely be needed to continue advancing financing, permitting and detailed engineering. It had no committed additional financing as of March 31 and warned that planned activities may need to be reduced if funds are unavailable.
- The filing states that substantial doubt exists about the company’s ability to continue as a going concern. Cash may not cover normal operations and debt obligations for the next 12 months without deferring certain liabilities and raising additional funds. Management is pursuing debt and equity financing, with no assurance of availability or acceptable terms; future equity financing may dilute shareholders.
- Management reported progress on rare-earth recovery testing and a small-scale demonstration plant, then expected to be operating during the fiscal quarter ending June 30, 2022. Rare-earth resource delineation remained uncertain. The company also reported that Nebraska’s environmental agency advised on April 15, 2022 that periodic extensions to its construction air permit were no longer required.
- Management cited potential effects from COVID-19, supply-chain and labor constraints, inflation, market volatility, and the Russia/Ukraine conflict. Other material risks include permitting, project financing and development, commodity prices, metallurgical results, and resource estimates. No material changes to the prior annual report’s risk factors were reported.
Important facts for investors to verify
- Whether NioCorp has obtained financing sufficient to meet near-term obligations and fund the Elk Creek work plan.
- The timing, amount, cost and dilution implications of any new debt or equity financing, and the status of the CEO-related facility that matured June 30, 2022.
- Demonstration-plant progress and test results, including whether rare-earth recovery can be demonstrated economically and support a defined resource.
- Current project permitting, engineering, construction-cost and schedule estimates, and whether the April 2022 air-permit update remains applicable.
- Reconcile share-count and convertible-debt disclosures: the filing reports 268.1 million shares at March 31 and 269.0 million as of May 6; certain later fully diluted figures use different dates and assumptions.