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Business Context and Reporting Period

Company: Ivanhoe Electric Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: August 13, 2024
Event: Completion of the acquisition of mineral rights for the Santa Cruz Project in Pinal County, Arizona, by its wholly-owned subsidiary, Mesa Cobre Holding Corporation.

Key Financial Metrics

Transaction Consideration: Total purchase price of $27.9 million.
Payment History: $17.9 million paid prior to the closing date; $10.0 million paid on the closing date.
Future Contingent Payments:

• AMRC Payment: $0.015 per pound of copper for reserves exceeding 2 billion pounds (based on a Definitive Feasibility Study), payable in five annual installments after commercial mining begins.
• Generational Payment: $0.015 per pound of copper (price-index adjusted) for production exceeding the DFS reserve estimate.

Other Financial Data: The filing does not provide revenue, profit, cash flow, margins, debt, or liquidity metrics for the reporting period.

Material Changes

The primary material change is the finalization of the Santa Cruz Project acquisition. Mesa Cobre received quitclaim deeds transferring mineral rights from DRH Energy, Inc. and DRH Phoenix East Construction, Inc. The sellers retained certain oil and gas interests. The transaction fulfills obligations under an Option Agreement originally dated August 16, 2021.

Outlook, Risks, and Contingencies

Management Commitments:

• Mesa Cobre must prepare a Definitive Feasibility Study (DFS) no later than August 16, 2027.
• Commercial mining operations are at the sole discretion of Mesa Cobre.

Contingencies and Risks:

• Future payments are contingent on the DFS results and future production levels.
• DRH Energy has the right to receive future payments in Ivanhoe Electric common stock at a 10% discount to the 5-day volume-weighted average price.
• The Company is subject to indemnification obligations under the Option Agreement.

Guidance: No specific financial guidance or outlook was provided in this filing.

Investor Verification Checklist

• Verify the terms of the Original Option Agreement (Exhibit 10.9 to the Feb 26, 2024 Form 10-K) regarding the calculation of the AMRC and Generational Payments.
• Confirm the timeline and scope for the required Definitive Feasibility Study (due by August 16, 2027).
• Review the press release (Exhibit 99.1) for additional details on the transaction closing.
• Assess the potential dilution impact if DRH Energy elects to receive future payments in common stock.