NioCorp Developments Ltd. — Form 10-Q Summary
Reporting period: Quarter ended December 31, 2021, the company’s fiscal second quarter of fiscal 2022. The filing reports unaudited results in U.S. dollars; financial statement amounts below are in millions unless noted. NioCorp is an exploration-stage company developing the Elk Creek niobium, scandium and titanium project in Nebraska, with potential rare earth recovery. It has no operating revenue.
Financial performance and liquidity
| Metric | Three months ended Dec. 31, 2021 | Six months ended Dec. 31, 2021 | Comparable 2020 period |
|---|---|---|---|
| Revenue | None | None | None |
| Operating expenses | $3.028 | $4.284 | $1.213 quarterly; $2.276 six months |
| Net loss | $3.458 | $5.418 | $1.081 quarterly; $2.134 six months |
| Operating cash used | Not provided for the quarter | $2.958 | $1.759 six months |
- Six-month operating expenses rose chiefly from higher employee and share-based compensation, professional fees, exploration work and financing-related advisory and investor-relations costs. Interest expense increased to $0.980 million from $0.258 million, primarily reflecting convertible-debt accretion.
- At December 31, cash was $4.866 million, versus $7.317 million at June 30, 2021. Current assets were $5.145 million and current liabilities $2.534 million; management reported working capital of $2.6 million, compared with $3.4 million at June 30.
- Total liabilities were $6.862 million, including $4.262 million of noncurrent convertible debt, a $2.000 million related-party loan, and lease liabilities. The related-party facility bears 10% interest, is secured by company assets, and was extended to June 30, 2022. The Nordmin note was converted, leaving no current convertible debt at period-end.
- Six-month financing cash inflows were $0.645 million, including $0.963 million from share issuances and $0.318 million of related-party debt repayments. Debt conversions of $4.522 million were noncash. The company issued no mining-production revenue, so profit margins are not applicable.
- Common shares outstanding increased to 264.0 million from 256.4 million at June 30, 2021. The remaining Lind III convertible security could require approximately 7.804 million shares at the period-end price, according to the filing.
Material changes and project developments
- Net loss more than doubled in both the quarter and six-month comparison. Operating cash use also increased year over year, reflecting greater Elk Creek spending and a prepayment for planned process-optimization testing.
- During the six months, the company completed conversions of convertible debt totaling $4.522 million. It also extended the CEO-related credit facility’s maturity and filed a $200 million shelf registration statement; the shelf provides offering capacity, not committed financing.
- Metallurgical testing and rare-earth assays advanced, including reported bench-scale results on rare-earth separation. Further testing and a small-scale demonstration plant remained planned; these activities do not establish commercial recovery or project economics.
- Nebraska extended the deadline to commence construction under the project’s air permit to April 4, 2022. The company also completed mine-design cost-estimate and optimization work and began developing an Equator Principles environmental and social program.
Outlook, risks and contingencies
- Going concern: Management stated that substantial doubt exists about the company’s ability to continue as a going concern. It has no operating revenue, reported $4.866 million in cash, and said cash may not cover normal operations and debt obligations for the next 12 months without additional funding or deferring liabilities. No additional financing commitments were in place at December 31.
- Management estimated planned operational needs of approximately $6.5 million through June 30, 2022, and said an additional $1 million to $2 million would likely be needed to advance financing, permitting and detailed engineering. It warned that failure to raise funds could require activity reductions and prevent planned work. Future equity or derivative financings may dilute shareholders.
- Longer-term construction and commercial operation require substantial additional capital. Financing availability and project timing are exposed to capital-market conditions and COVID-19 uncertainty. Other disclosed risks include permitting and environmental requirements, project costs, commodity prices, mineral-resource estimates, technical and metallurgical performance, and currency movements.
- The filing gives no production or revenue guidance. It anticipates operating losses for the foreseeable future. Management said further project work—including engineering, infrastructure, permitting and demonstration-plant activity—depends on available funding.
Most important facts for investors to verify
- Whether NioCorp secures financing sufficient for near-term operations and ultimately for Elk Creek construction, and the terms and potential dilution of any funding.
- Cash runway, debt obligations and the June 30, 2022 maturity of the secured related-party facility.
- Whether construction begins by the April 4, 2022 air-permit deadline and whether required permits remain valid.
- Whether additional metallurgical testing and rare-earth resource work produce verified recovery, resource and economic results; reported bench-scale findings are preliminary.
- Whether reported liquidity and planned spending assumptions remain current, given the filing’s substantial-doubt going-concern disclosure.