NIOCORP DEVELOPMENTS LTD. The following discussion and analysis should be read in conjunction with our unaudited condensed interim consolidated financial statements as of, and for the three and nine months endedMarch 31, 2021 , and the related notes thereto, which have been prepared in accordance with generally accepted accounting principles inthe United States ("US GAAP"). This discussion and analysis contains forward-looking statements and forward-looking information that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements and information as a result of many factors, including, but not limited to, those set forth elsewhere in this Quarterly Report on Form 10-Q. See "Note Regarding Forward-Looking Statements" below.
All currency amounts are stated in thousands of
As used in this report, unless the context otherwise indicates, references to "we," "our," the "Company," "NioCorp," and "us" refer toNioCorp Developments Ltd. and its subsidiaries, collectively.
Note Regarding Forward Looking Statements
This Quarterly Report on Form 10-Q and the exhibits attached hereto contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and "forward-looking information" within the meaning of applicable Canadian securities legislation (collectively, "forward-looking statements"). Such forward-looking statements concern our anticipated results and developments in the operations of the Company in future periods, planned exploration activities, the adequacy of the Company's financial resources, and other events or conditions that may occur in the future. Forward-looking statements are frequently, but not always, identified by words such as "expects," "anticipates," "believes," "intends," "estimates," "potential," "possible," and similar expressions, or statements that events, conditions, or results "will," "may," "could," or "should" (or the negative and grammatical variations of any of these terms) occur or be achieved. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, or future events or performance (often, but not always, using words or phrases such as "expects" or "does not expect," "is expected," "anticipates" or "does not anticipate," "plans," "estimates," or "intends," or stating that certain actions, events, or results "may," "could," "would," "might," or "will" be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Such forward-looking statements reflect the Company's current views with respect to future events and are subject to certain known and unknown risks, uncertainties, and assumptions. Many factors could cause actual results, performance, or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including, among others, risks related to the following: ? risks related to our ability to operate as a going concern; ? risks related to our requirement of significant additional capital; ? risks related to our limited operating history;
? risks related to changes in economic valuations of the
such as net present value calculations, changes or disruptions in the
securities markets;
? risks related to our history of losses;
? risks related to cost increases for our exploration and, if warranted,
development projects;
? risks related to feasibility study results;
? risks related to mineral exploration and production activities;
? risks related to our lack of mineral production from our properties;
? risks related to the results of our metallurgical testing;
? risks related to the price volatility of commodities;
? risks related to estimates of mineral resources and reserves;
? risks related to changes in mineral resource and reserve estimates;
? risks related to differences in
reporting;
? risks related to our exploration activities being unsuccessful;
17
? risks related to our ability to obtain permits and licenses for
production;
? risks related to government and environmental regulations that may
increase our costs of doing business or restrict our operations;
? risks related to proposed legislation that may significantly affect the
mining industry;
? risks related to land reclamation requirements;
? risks related to competition in the mining industry;
? risks related to the difficulties of managing and treating water at our
Elk Creek Project ;
? risks related to equipment and supply shortages;
? risks related to current and future joint ventures and partnerships;
? risks related to our ability to attract qualified management;
? risks related to the ability to enforce judgment against certain of our
Directors;
? risks related to claims on the title to our properties;
? risks related to surface access on our properties;
? risks related to potential future litigation;
? risks related to our lack of insurance covering all our operations;
? risks related to the need for resilience in the face of potential impacts
from climate change;
? risks related to a disruption in, or failure of, our informationtechnology ("IT") systems, including those related to cybersecurity;
? risks related to covenants contained in agreements with our secured
creditors that may affect our assets;
? risks related to the extent to which our level of indebtedness may impair
our ability to obtain additional financing;
? risks related to our status as a "passive foreign investment company"
under the
? risks related to our Common Shares, including price volatility, lack of
dividend payments, dilution and penny stock rules;
? risks related to our status as an "emerging growth company" and the impact
of related reduced reporting requirements on our ability to attract
investors; and
? Risks related to the effects of the COVID-19 pandemic on our business
plans, financial condition and liquidity.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described herein. This list is not exhaustive of the factors that may
affect any of the Company's forward-looking statements. Forward-looking
statements are statements about the future and are inherently uncertain, and
actual achievements of the Company or other future events or conditions may
differ materially from those reflected in the forward-looking statements due to
a variety of risks, uncertainties, and other factors, including without
limitation those discussed under the heading "Risk Factors" of our Annual Report
on Form 10-K for the fiscal year ended June 30, 2020 , as well as other factors
described elsewhere in this report and the Company's other reports filed with
the Securities and Exchange Commission ("SEC").
The Company's forward-looking statements contained in this Quarterly Report on
Form 10-Q are based on the beliefs, expectations, and opinions of management as
of the date of this report. The Company does not assume any obligation to update
forward-looking statements if circumstances or management's beliefs,
expectations, or opinions should change, except as required by law. For the
reasons set forth above, investors should not attribute undue certainty to, or
place undue reliance on, forward-looking statements.
National Instrument 43-101 Compliance
Scott Honan ,M.Sc ., SME-RM, a qualified person as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"), has supervised the preparation of the scientific and technical information that forms the basis for theElk Creek Project disclosure in this Quarterly Report on Form 10-Q and has approved the disclosure in this Quarterly Report on Form 10-Q related thereto.Mr. Honan is not independent of the Company, as he is the Chief Operating Officer. Additional information on the updated Feasibility Study for theElk Creek Project (the "2019 Feasibility Study") is available in our NI 43-101 Technical Report, issuedMay 29, 2019 , which is available under NioCorp's profile on the Canadian Administrators website at www.sedar.com and on our website at www.niocorp.com/wp-content/uploads/180001_FINAL_43-101_FS_NioCorp_AS_FILED.pdf.
18
Company Overview
NioCorp is developing the Elk Creek Project , located in southeast Nebraska . The
Elk Creek Project is an advanced Niobium ("Nb")/Scandium ("Sc")/Titanium ("Ti")
exploration project. Niobium is used to produce various superalloys that are
extensively used in high performance aircraft and jet turbines. It also is used
in High-Strength, Low-Alloy ("HSLA") steel, a stronger steel used in
automobiles, bridges, structural systems, buildings, pipelines, and other
applications that generally increases strength and/or reduces weight, which can
result in environmental benefits, including reduced fuel consumption and
material usage and fewer air emissions. Scandium can be combined with aluminum
to make high-performance alloys with increased strength and improved corrosion
resistance. Scandium also is a critical component of advanced solid oxide fuel
cells, an environmentally preferred technology for high-reliability, distributed
electricity generation. Titanium is a component of various superalloys and other
applications that are used for aerospace applications, weapons systems,
protective armor, medical implants and many others. It also is used in pigments
for paper, paint, and plastics.
Our primary business strategy is to advance our Elk Creek Project to commercial
production. We are focused on obtaining additional funds to carry out our
near-term planned work programs associated with securing the project financing
necessary to complete mine development, construction, commissioning, and
operation of the Elk Creek Project .
Emerging Growth Company Status
We qualify as an "emerging growth company" as defined in Section 101 of the
Jumpstart our Business Startups Act ("JOBS Act") as we do not have more than
$1.07 billion in annual gross revenue and did not have such amount as of June
30, 2020 , this being the last day of our most recently completed fiscal year.
We may lose our status as an emerging growth company on the last day of our
fiscal year during which (i) our annual gross revenue exceeds $1.07 billion or
(ii) we issue more than $1.07 billion in non-convertible debt in a three-year
period. We will lose our status as an emerging growth company if at any time we
are deemed to be a large accelerated filer, as defined in Rule 405 under the
Exchange Act. We will lose our status as an emerging growth company on the last
day of our fiscal year following the fifth anniversary of the date of our first
sale of Common Shares pursuant to an effective registration statement.
As an emerging growth company under the JOBS Act, we have elected to opt out of the extended transition period for complying with new or revised standards pursuant to Section 107(b) of the JOBS Act. The election is irrevocable.
As an emerging growth company, we are exempt from Section 404(b) of the Sarbanes-Oxley Act of 2002 and Section 14A(a) and (b) of the Exchange Act. Such sections are described below:
? Section 404(b) of the Sarbanes-Oxley Act of 2002 requires a public
company's auditor to attest to, and report on, management's assessment of
its internal controls.
? Sections 14A(a) and (b) of the Exchange Act, implemented by Section 951 ofthe Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the
"Dodd-Frank Act"), require companies to hold shareholder advisory votes on
executive compensation and golden parachute compensation.
As long as we qualify as an emerging growth company, we will not be required to
comply with the requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002
and Section 14A (a) and (b) of the Exchange Act.
COVID-19
In December 2019 , COVID-19 was identified in Wuhan, China , and has since spread
to other countries, including the United States . In March 2020 , the World Health
Organization characterized COVID-19 as a pandemic. Several countries, including
the United States , continue to take steps to restrict travel, temporarily close
businesses and issue quarantine orders, and it remains unclear how long
currently enacted measures will remain in place. COVID-19 vaccination programs
started in the United States in December 2020 and currently over one-third of
the populations of both Colorado and Nebraska are fully vaccinated. As a result
of the COVID-19 pandemic, the Company is following, and will continue to follow,
social distancing, health and safety protocol, business-related social gathering
restrictions, and other similar guidelines promulgated by both Colorado and
Nebraska governmental officials.
19
On April 17, 2020 , NioCorp's subsidiary, Elk Creek Resources Corp. , received a
U.S. Small Business Administration Loan (the "SBA Loan") from American National
Bank , pursuant to the Paycheck Protection Program (the "PPP") established under
the Coronavirus Aid, Relief, and Economic Security Act, commonly referred to as
the CARES Act, in the amount of $196 . Under the terms of the SBA Loan, the
Company may be eligible for full or partial loan forgiveness. The unforgiven
portion of the SBA Loan is payable over two years at an annual interest rate of
1%, with a deferral of payments for the first six months. The Company used the
proceeds for purposes consistent with the PPP.
On October 27, 2020 , the Company applied for loan forgiveness of $186 ,
comprising the initial SBA Loan balance less $10 representing an Economic Injury
Disaster Loan Advance grant (the "EIDL advance") received by the Company in
April 2020 . On November 18, 2020 , the Company was notified that the $186 loan
forgiveness request had been approved.
On December 21, 2020 , the U.S. Congress passed the Consolidated Appropriations
Act, 2021 (the "Act"), which provided additional COVID-19 relief legislation as
well as government funding and other bills. The Act removes the previous
requirement that PPP borrowers deduct the amount of any EIDL advance from their
PPP forgiveness amount. The SBA released Procedural Notice 5000-20075, effective
January 8, 2021 , stating that the SBA will no longer deduct EIDL Advances from
forgiveness payments remitted to PPP lenders. Accordingly, the Company recorded
a gain in other income in the consolidated statement of operations for the
remaining $10 of the SBA Loan.
The COVID-19 pandemic continues to create uncertainty with regards to overall
project funding timelines and has heightened the risk that we may be unable to
secure sufficient additional capital, including but not limited to equity and
debt offerings, to fund future expenditures or to maintain our liquidity. It is
also possible that the COVID-19 pandemic could further adversely affect our
business plans, results of operations, financial condition or liquidity in the
future. The impact of the COVID-19 pandemic is fluid and continues to evolve,
and therefore, we cannot currently predict the extent to which our business
plans, results of operations, financial condition or liquidity will ultimately
be impacted.
Recent Corporate Events
On February 19, 2021 , the Company issued to Lind Global Asset Management III,
LLC ("Lind III"), an entity managed by The Lind Partners , a New York -based asset
management firm, a convertible security (the "Lind III Convertible Security")
pursuant to a definitive convertible security funding agreement, dated as of
February 16, 2021 (the "Lind Agreement"), between the Company and Lind III. The
Lind III Convertible Security has a face value of $11,700 (representing $10,000
in funding plus an closed an implied 8.5% interest rate per annum for the term
of the Lind III Convertible Security). After deducting a $350 commitment fee as
set forth in the Lind Agreement, NioCorp received net proceeds of $9,650 from
the funding of the Lind III Convertible Security. The Company intends to use the
proceeds from the funding of the Lind III Convertible Security to pay the
exercise price under an option-to-purchase agreement on a key land parcel
associated with the Company's Elk Creek Project , as discussed below under "Elk
Creek Project Update," as well as for general corporate purposes.
The Lind III Convertible Security has a term of (i) 24 months or (ii) 30
calendar days after the date on which the face value of the Lind III Convertible
Security is nil due to such amount having been fully converted and/or fully
repaid (including with any applicable premium) in accordance with the terms of
the Lind Agreement, whichever is earlier. The Lind III Convertible Security
constitutes the direct, general and unconditional obligation of the Company and
ranks pari-passu with the Company's other indebtedness. The Lind III Convertible
Security is guaranteed on a secured basis by 0896800 B.C. Ltd. , a wholly-owned
subsidiary of the Company ("0896800"), and Elk Creek Resources Corp. , a private
Nebraska corporation and wholly-owned subsidiary of 0896800 ("ECRC").
20
The Lind III Convertible Security is secured by all of the assets and property
of the Company and 0896800, including all of the issued and outstanding shares
of 0896800 pledged by the Company and all of the issued and outstanding shares
of ECRC pledged by 0896800, and certain real property and fixtures of ECRC. The
liens securing the Lind III Convertible Security rank pari-passu with the liens
securing: i) the loan with Mark Smith , President, Chief Executive Officer
("CEO") and Executive Chairman of NioCorp (the "Smith Loan"), pursuant to the
Loan Agreement, dated June 17, 2015 , by and between the Company and Mr. Smith ,
as amended from time to time; and ii) a non-revolving credit facility (the
"Smith Credit Facility") with a limit of $3,500 with Mr. Smith , pursuant to the
Credit Facility Agreement, dated January 16, 2017 , between the Company and Mr.
Smith , as amended from time to time. The liens securing the Lind III Convertible
Security rank senior to the liens securing the Smith Loan and the Smith Credit
Facility on any amount that is owed by the Company to Mr. Smith in excess of
$4,000 .
Pursuant to the Lind Agreement, Lind III is entitled to convert the Lind III
Convertible Security into common shares of the Company ("Common Shares") in
monthly installments over its term at a price per Common Share equal to 85% of
the volume-weighted average price Common Shares on the Toronto Stock Exchange
("TSX") for the five trading days immediately preceding to the date on which
Lind III provides notice to the Company of its election to convert. Subject to
certain exceptions, the Lind Agreement contains restrictions on how much of the
Lind III Convertible Security may be converted in any particular month. The Lind
Agreement also provides NioCorp with the option to buy back the remaining face
amount of the Lind III Convertible Security in cash at any time; provided that,
if the Company exercises such option, Lind III will have the option to convert
up to 33.33% of the remaining face amount into Common Shares at the price
described above. In addition, Lind III is entitled to accelerate its conversion
right to the full amount of the face value of the Lind III Convertible Security
or demand repayment thereof in cash upon the occurrence of an event of default
and other designated events described in the Lind Agreement.
On February 19, 2021 , in connection with the funding and issuance of the Lind
III Convertible Security, the Company issued 8,558,000 Common Share purchase
warrants, exercisable at a price per Common Share of C$0.97 , expiring February
19, 2025 (the "Lind III Warrants"), to Lind III pursuant to the Lind Agreement.
The Lind III Convertible Security and the Lind III Warrants were issued pursuant to the exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) thereof based upon the representations and warranties of Lind III in the Lind Agreement.
OnApril 30, 2021 , the Company repaid$1,000 toMark Smith , to retire all of the outstanding balance on the Smith Loan. OnApril 30, 2021 andMay 4, 2021 , The Company repaid$250 and$250 , respectively, representing partial repayments on the Smith Credit Facility. Each of these loan repayments utilized proceeds from the exercise of warrants. Additionally, onMay 4, 2021 , the Company repaid$138 toMark Smith , representing accrued interest on the Smith Loan through the repayment date noted above and accrued interest on the Smith Credit Facility throughApril 30, 2021 . OnMay 10, 2021 , the Company closed a non-brokered private placement (the "April 2021 Private Placement") of units of the Company ("Units"). A total of 4,334,157 Units were issued at a price per Unit ofC$1.43 , for total gross proceeds to the Company of approximatelyC$6.2 million . Each Unit issued pursuant to theApril 2021 Private Placement consisted of one Common Share and one Warrant. Each Warrant entitles the holder thereof to purchase one additional Common Share at a price ofC$1.63 for a period of two years from the date of issuance. Proceeds of theApril 2021 Private Placement will be used for continued advancement of theCompany's Elk Creek Superalloy Materials Project , including ongoing detailed engineering efforts, conducting technical assessments of potentially adding rare earth products to the planned product offering, and for working capital and general corporate purposes. Elk Creek Project Update OnFebruary 22, 2021 , the Company announced that it formally exercised its option to purchase two parcels of land and associated rights inJohnson County, Nebraska associated with theCompany's Elk Creek Project , pursuant to the Amended and Restated Option to Purchase, dated as ofApril 29, 2020 (the "Option Agreement"), betweenBeverly J. Beethe and ECRC. OnApril 23, 2021 , ECRC formally exercised and closed on the Option Agreement. Pursuant to the terms of the Option Agreement, the Owner sold, transferred, conveyed and assigned all of her rights, privileges, title and interest in and to the real property to ECRC, including any associated oil, gas and mineral rights. The Option Agreement provides for a purchase price calculated based on the appraised value per acre of the parcels of land, the mineral rights and the structures erected on the land. The purchase price was approximately$6.2 million . 21 OnFebruary 23, 2021 , the Company announced that it has signed a contract withCementation USA, Inc , part of theCementation Americas Group ("Cementation"), a leading global underground mine contracting and engineering company, to continue advancing detailed engineering work associated with theElk Creek Project . Under the contract, Cementation will conduct an evaluation of the current design for theElk Creek Project's underground mine and prepare a detailed cost estimate for the final detailed engineering that would be required to bring the mine design to "Issued for Construction" status. As previously announced by NioCorp, Cementation has been selected as the lead Engineering, Procurement, and Construction contractor for the underground aspects of theElk Creek Project . NioCorp expects to engage Cementation, if and when additional financing becomes available, to undertake Phase 2 of the contract, which involves completion of the detailed engineering for the mine. OnMarch 2, 2021 , the Company announced that it launched a review of the economic potential of expanding its currently planned product suite from theElk Creek Project to also include rare earth products. We currently plan to produce niobium, scandium, and titanium at theElk Creek Project once project financing is secured and theElk Creek Project is operational, and any rare earth products that might be produced would be additional to our currently planned products. The Company's review of previously collected data on rare earth content comes in response to growing interest by governments and industrial consumers around the world for additional sources of rare earths beyond current suppliers. As noted in more detail below, additional test work is needed to establish a means of recovering and extracting rare earths into saleable products. The Company has completed a comprehensive geologic and metallurgical evaluation of all of the rare earth data associated with theElk Creek Project . Of the 20,364 assay results in the Elk Creek database, 13,287 (65%) contain a complete suite of analytical data for all commercial rare earth elements. Included within this dataset are 661 assays where the Total Rare Earth Oxide ("TREO") assay results are greater than one percent. Our current plan to extract and purify niobium, scandium, and titanium from ore that may be produced by theElk Creek Project involves putting these critical minerals into solution. As part of that process, rare earth elements would be simultaneously put into solution. Among the factors NioCorp will now consider as part of its overall plan to move theElk Creek Project from the exploration stage to the development stage, and ultimately, the production stage, subject to securing additional financing, is the economic potential for additional processing of the solubilized rare earths into commercial rare earth products. Other Activities Our long-term financing efforts continued during the quarter endedMarch 31, 2021 . However, as noted above under "COVID-19," the COVID-19 pandemic has created uncertainty and continues to impact processes related to the Company's efforts to obtain project financing. As funds become available through the Company's fundraising efforts, we expect to undertake the following activities: ? Continuation of the Company's efforts to secure federal, state and local permits;
? Continued evaluation of the potential to produce rare earth products
? Negotiation and completion of engineering, procurement and construction
agreements;
? Completion of the final detailed engineering for the underground portion
of the
? Initiation and completion of the final detailed engineering for surface
project facilities;
? Construction of natural gas and electrical infrastructure under existing
agreements to serve the Elk Creek Project site;
? Completion of water supply agreements and related infrastructure to
deliver fresh water to the project site;
? Initiation of revised mine groundwater investigation and control
activities; and
? Initiation of long-lead equipment procurement activities.
22
Financial and Operating Results
The Company has no revenues from mining operations. Operating expenses incurred related primarily to performing exploration activities, as well as the activities necessary to support corporate and shareholder duties and are detailed in the following table.
For the Three Months Ended March 31, For the Nine Months Ended March 31,
2021 2020 2021 2020
Operating expenses
Employee-related costs $ 327 $ 341 $ 1,332 $ 1,040
Professional fees 83 41 276 226
Exploration expenditures 297 294 711 971
Other operating expenses 138 141 802 473
Total operating expenses 845 817 3,121 2,710
Other income (22 ) - (208 ) -
Loss on extinguishment - - 163 -
Change in financial instrument fair value (60 ) (49 ) (32 ) 39
Foreign exchange (gain) loss (94 ) 395 (497 ) 359
Interest expense 354 100 612 233
(Gain) loss on equity securities (10 ) (1 ) (12 ) 2
Income tax expense - - - -
Net Loss $ 1,013 $ 1,262 $ 3,147 $ 3,343
Nine months ended
Significant items affecting operating expenses are noted below:
Employee-related costs increased in 2021 as compared to 2020, primarily due to increased share-based compensation costs, which reflect the timing of 2021 Option grants, which were fully vested and expensed on the grant date.
Exploration expenditures decreased in 2021 as compared to 2020, primarily due to the costs incurred in 2020 related to advancing work to obtain an air construction permit from theState of Nebraska . 2021 expenditures primarily related to the ongoing personnel costs, as well as general project advancement activities. Other operating expenses include investor relations, general office expenditures, equity offering and proxy expenditures, board-related expenditures and other miscellaneous costs. These costs increased in 2021 as compared to 2020 primarily due to 2021 Option grants, which were fully vested and expensed on the grant date. These costs were partially offset by a decrease in finance-related contract costs.
Other significant items impacting the change in the Company's net loss are noted below:
Other income for 2021 represents the forgiveness of the Company's SBA Loan as discussed in Note 6 to the financial statements included in this Quarterly Report on Form 10-Q, and other minor gains.
Loss on extinguishment for 2021 represents the loss incurred in connection with the conversion of the Nordmin accounts payable balance to the one-year Nordmin Convertible Note, as discussed in Note 5 to the financial statements included in this Quarterly Report on Form 10-Q. Foreign exchange (gain) loss is primarily due to changes in theU.S. dollar against the Canadian dollar and reflects the timing of foreign currency transactions, primarilyU.S. dollar-based related party loans, and subsequent changes in exchange rates, and the gain during 2021 as compared to a loss in 2020 is due to a decline in theU.S. dollar relative to the Canadian dollar in 2021. 23 Interest expense increased in 2021 as compared to 2020 primarily due to the accretion of the Lind III Convertible Security, which began inFebruary 2021 , as well as the timing of 2020 increases in principal amounts outstanding under the non-revolving credit facility agreement (the "Credit Agreement") withMark Smith , President, Chief Executive Officer ("CEO") and Executive Chairman of NioCorp.
Three months ended
Overall, the decrease in net loss for the three months endedMarch 31, 2021 , as compared to the same period in 2020, is primarily the result of the same factors underlying the nine-month changes in foreign exchange (gain) loss and interest expense as discussed above.
Liquidity and Capital Resources
We have no revenue generating operations from which we can internally generate funds. To date, our ongoing operations have been financed by the sale of our equity securities by way of private placements, convertible securities issuances, the exercise of incentive stock options and share purchase warrants, and related party loans. While the COVID-19 pandemic has created uncertainty with respect to overall project funding timelines, we believe that we will be able to secure additional private placement financings in the future, although we cannot predict the timing, size, or pricing of any such financings. In addition, we could raise funds through the sale of interests in our mineral properties, although current market conditions and the impacts of the COVID-19 pandemic have substantially reduced the number of potential buyers/acquirers of any such interests. However, we cannot provide any assurances that we will be able to be successful in raising such funds. As ofMarch 31, 2021 , the Company had cash of$8.6 million and a working capital surplus of$2.9 million , compared to cash of$0.3 million and working capital deficit of$7.7 million onJune 30, 2020 . The working capital surplus for 2021 is due to the timing of cash inflows from convertible debt arrangements and warrant redemptions to support current operations offset slightly by a continued effort to reduce outstanding accounts payable balances. We expect that the Company will operate at a loss for the foreseeable future. The Company's current planned operational needs are approximately$9.2 million untilJune 30, 2021 , inclusive of the purchase of land parcels described above under "Elk Creek Project Update," as well as the retirement of the Smith Loan and partial repayment of the Smith Credit Facility discussed above under "Recent Corporate Events." In addition to outstanding accounts payable and short-term liabilities, our average monthly expenditures are approximately$601 per month where approximately$590 is for corporate overhead and estimated costs related to securing financing necessary for advancement of theElk Creek Project . Approximately$11 per month is planned for expenditures relating to the advancement ofElk Creek Project by NioCorp's wholly owned subsidiary,Elk Creek Resources Corp. The Company's ability to continue operations and fund our current work plan is dependent on management's ability to secure additional financing. The Company anticipates that it has sufficient cash, including net proceeds from theApril 2021 Private Placement, to continue to fund basic operations for the next twelve months. As additional funds are secured, we will continue advancing the project in the areas of financing, permitting, and detailed engineering. Management is actively pursuing such additional sources of debt and equity financing, and while it has been successful in doing so in the past, there can be no assurance it will be able to do so in the future. Elk Creek property lease commitments are $nil untilJune 30, 2021 . To maintain its currently held properties and fund its currently anticipated general and administrative costs and planned exploration and development activities at theElk Creek Project for the fiscal year endingJune 30, 2021 , the Company will likely require additional financing during the current fiscal year. Should such financing not be available in that timeframe, we will be required to reduce our activities and will not be able to carry out all our presently planned activities at theElk Creek Project . We currently have no further funding commitments or arrangements for additional financing at this time (other than theApril 2021 Private Placement and the potential exercise of Options and Warrants) and there is no assurance that we will be able to obtain additional financing on acceptable terms, if at all. There is significant uncertainty that we will be able to secure any additional financing in the current equity or debt markets. The quantity of funds to be raised and the terms of any proposed equity or debt financing that may be undertaken will be negotiated by management as opportunities to raise funds arise. Management intends to pursue funding sources of both debt and equity financing, including but not limited to the issuance of equity securities in the form of Common Shares, Warrants, subscription receipts, or any combination thereof in units of the Company pursuant to private placements to accredited investors or pursuant to equity lines of credit or public offerings in the form of underwritten/brokered offerings, at-the-market offerings, registered direct offerings, or other forms of equity financing and public or private issuances of debt securities including secured and unsecured convertible debt instruments or secured debt project financing. Management does not currently know the terms pursuant to which such financings may be completed in the future, but any such financings will be negotiated at arm's-length. Future financings involving the issuance of equity securities or derivatives thereof will likely be completed at a discount to the then-current market price of the Company's securities and will likely be dilutive to current shareholders. 24 The audit opinion and notes that accompany our financial statements for the year endedJune 30, 2020 disclose that substantial doubt exists as to our ability to continue in business. The financial statements included in this Quarterly Report on Form 10-Q have been prepared under the assumption that we will continue as a going concern. We are an exploration stage company and we have incurred losses since our inception. We may not have sufficient cash to fund normal operations and meet debt obligations for the next twelve months without deferring payment on certain current liabilities and raising additional funds. The continued spread of COVID-19 has resulted in business travel restrictions and capital market disruptions, and this has had an adverse impact on our ability to obtain financing, development plans, results of operations, financial position, and cash flows during the current fiscal year. We believe that the going concern uncertainty cannot be alleviated with confidence until the Company has entered into a business climate where funding of its planned ongoing operating activities is secured. Therefore, these factors raise substantial doubt as to our ability to continue as a going concern. We have no exposure to any asset-backed commercial paper. Other than cash held by our subsidiaries for their immediate operating needs inColorado andNebraska , all of our cash reserves are on deposit with majorUnited States and Canadian chartered banks. We do not believe that the credit, liquidity, or market risks with respect thereto have increased as a result of the current market conditions. However, in order to achieve greater security for the preservation of our capital, we have, of necessity, been required to accept lower rates of interest, which has also lowered our potential interest income. Operating Activities During the nine months endedMarch 31, 2021 , the Company's operating activities consumed$3.6 million of cash (2020:$2.2 million ). The cash used in operating activities for the nine months endedMarch 31, 2021 reflects the Company's funding of losses of$3.1 million , partially offset by share-based compensation charges, other non-cash transactions and a$1.0 million decrease in accounts payable and accrued liabilities. Overall, operational outflows during the nine months endedMarch 31, 2021 increased from the corresponding period of 2020 due to the continued focus on paying down our outstanding accounts payable. Going forward, the Company's working capital requirements are expected to increase substantially in connection with the development of theElk Creek Project . Financing Activities Financing inflows were$11.9 million during the nine months endedMarch 31, 2021 , as compared to$1.9 million during the corresponding period in 2020, primarily reflecting the timing of the Lind III Convertible Security funding inFebruary 2021 , as well as warrant and option exercises and related party debt drawdowns initiated during the comparative periods. Cash Flow Considerations As noted above under "COVID-19," the COVID-19 pandemic has created uncertainty with respect to overall project funding timelines. The Company has historically relied upon debt and equity financings to finance its activities. The Company may pursue additional debt and/or equity financing in the medium term; however, there can be no assurance the Company will be able to obtain any required financing in the future on acceptable terms. The Company has limited financial resources compared to its proposed expenditures, no source of operating income, and no assurance that additional funding will be available to it for current or future projects, although the Company has been successful in the past in financing its activities through the sale of equity securities. 25 The ability of the Company to arrange additional financing in the future will depend, in part, on the prevailing capital market conditions, including the impacts of the COVID-19 pandemic on the timing and availability of funding, and its success in developing theElk Creek Project . Any quoted market for the Common Shares may be subject to market trends generally, notwithstanding any potential success of the Company in creating revenue, cash flows, or earnings, and any depression of the trading price of the Common Shares could impact its ability to obtain equity financing on acceptable terms. Historically, the Company has used net proceeds from issuances of Common Shares to provide sufficient funds to meet its near-term exploration and development plans and other contractual obligations when due. However, development and construction of theElk Creek Project will require substantial additional capital resources. This includes near-term funding and, ultimately, funding forElk Creek Project construction and other costs. See "Liquidity and Capital Resources" above for the Company's discussion of arrangements related to possible future financings. Contractual Obligations There have been no material changes to our contractual obligations discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" under the heading "Contractual Obligations" as ofJune 30, 2020 , in our Annual Report on Form 10-K for the fiscal year endedJune 30, 2020 , other than (i) the signing of the three-year corporate office lease extension; (ii) the conversion of the remaining balance under the convertible security held by Lind of$38 into 64,298 Common Shares onJuly 9, 2020 ; (iii) the conversion of$50 of the Company's convertible promissory notes into 67,695 Common Shares on the maturity date,October 14, 2020 ; (iv) the forgiveness of$186 of the SBA Loan onNovember 18, 2020 ; (v) the set-off of accounts payable relating to past services provided by Nordmin with the issuance of the Nordmin Convertible Note in the principal amount of$1,872 onDecember 18, 2020 ; (vi) the funding of the Lind III Convertible Security onFebruary 19, 2021 , resulting in net proceeds of$9,650 ; (vii) the conversion of the remaining$750 of the Company's convertible promissory notes into 976,921 Common Shares onMarch 16, 2021 ; and (viii) repayment of the outstandingSmith Loan of$1,000 onApril 29, 2021 and$250 reductions to the Smith Credit Facility onApril 29, 2021 andMay 4, 2021 , respectively. EffectiveDecember 14, 2020 , the maturity dateSmith Credit Facility was extended toDecember 15, 2021 .
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
Critical Accounting Policies There have been no material changes in our critical accounting policies discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" under the heading "Critical Accounting Policies" as ofJune 30, 2020 , in our Annual Report on Form 10-K for the fiscal year endedJune 30, 2020 .
Certain
The Company has been a "passive foreign investment company" ("PFIC") as defined
under Section 1297 of the U.S. Internal Revenue Code of 1986, as amended, in
recent years and expects to continue to be a PFIC in the future. Current and
prospective United States shareholders should consult their tax advisors as to
the tax consequences of PFIC classification and the U.S. federal tax treatment
of PFICs. Additional information on this matter is included in the "Risk
Factors" section of the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 2020 , under the heading "Risks Related to the Common Shares."
26© Edgar Online, source
