NioCorp Developments Ltd. — Form 10-Q Summary
Reporting period: Fiscal second quarter and six months ended December 31, 2020; filed February 5, 2021. Unaudited figures are in thousands of U.S. dollars unless otherwise noted.
Business context
NioCorp is an exploration-stage company developing the Elk Creek niobium, scandium and titanium project in Nebraska. It has no mining revenue and depends on external financing to fund operations and advance the project.
Financial results and liquidity
| Metric | Three months ended Dec. 31, 2020 | Six months ended Dec. 31, 2020 | Prior-year comparable |
|---|---|---|---|
| Revenue | None | None | None |
| Operating expenses | $1,213 | $2,276 | $1,001 and $1,893, respectively |
| Net loss | $1,081 | $2,134 | $1,076 and $2,081, respectively |
| Cash used in operations | Not separately stated | $1,759 | $1,380 |
| Cash provided by financing | Not separately stated | $1,569 | $1,080 |
At December 31, cash was $133, total assets $11,066, current liabilities $7,655 and total liabilities $7,945. The working-capital deficit was $7,471 and accumulated deficit was $96,820. Shareholders’ equity was $3,121. The company reported related-party loans of $3,818, convertible debt of $2,075 and notes payable of $349; lease liabilities totaled $233. Margins are not meaningful because the company had no revenue.
Changes and notable items
- Six-month operating expenses rose to $2,276 from $1,893, principally reflecting higher employee-related and other costs, including fully vested option compensation. Exploration expenditures declined to $414 from $677.
- Six-month net loss increased to $2,134 from $2,081. Results included a $186 gain from PPP loan forgiveness, a $163 loss on extinguishment of debt related to the Nordmin transaction, and a $403 foreign-exchange gain.
- Operating cash outflow increased to $1,759 from $1,380, while financing provided $1,569. Cash fell from $307 at June 30, 2020 to $133 at period end.
- Shares outstanding increased from 235.9 million at June 30 to 240.1 million at December 31; 241.1 million were outstanding as of February 5, 2021.
Financing, outlook and risks
- Management said cash on hand was insufficient for normal operations and debt obligations over the next 12 months without deferring certain current liabilities and raising additional funds. The filing identifies substantial doubt about the company’s ability to continue as a going concern.
- Management estimated planned operational needs of about $6.0 million through June 30, 2021, and said it may need to raise $7.0 million–$8.5 million to fund planned operations for the next 12 months. No additional financing arrangements were in place at December 31, aside from approximately $700 available under a related-party credit facility. There is no assurance financing will be obtained on acceptable terms.
- Loans from CEO and Executive Chairman Mark Smith, bearing 10% interest and secured by company assets, had $3,818 principal outstanding; their maturities were extended to December 15, 2021. The Nordmin convertible note, issued in exchange for past-service payables, matures December 18, 2021 and carries an implied 5% rate; conversion and warrants may dilute shareholders.
- COVID-19-related travel restrictions and capital-market disruption could delay financing and project work. If financing is unavailable, the company may have to reduce activities and cannot complete all planned work.
- Small-scale metallurgical tests indicated carbonation may offer an alternative niobium extraction process. Larger-scale testing and evaluation remain necessary; potential cost benefits are not established.
- Management’s intended project work, subject to available funding, includes permitting, engineering, infrastructure planning and long-lead equipment procurement. No production or revenue forecast was provided.
Investor facts to verify
- Current cash needs, timing and terms of new financing, and whether the going-concern uncertainty has changed.
- Near-term debt maturities, related-party loan terms and any required deferral of current liabilities.
- Potential dilution from convertible debt, warrants, options and future equity financing.
- Progress and funding for Elk Creek permitting, detailed engineering and project financing.
- Results of further carbonation testing and the status of any additional PPP forgiveness application.