ie-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-41436

Ivanhoe Electric Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware			32-0633823
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
606 – 999 Canada Place Vancouver, BC Canada			V6C 3E1
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (604) 689-8765

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer	x	Smaller reporting company	x

Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of May 15, 2023, the registrant had 92,979,197 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents

IVANHOE ELECTRIC INC. Form 10-Q

For the Quarter Ended March 31, 2023


		Page
PART I. FINANCIAL INFORMATION		3
Item 1.	Condensed Interim Consolidated Financial Statements	3
	Condensed Interim Consolidated Balance Sheets	3
	Condensed Interim Consolidated Statements of Loss and Comprehensive Loss	4
	Condensed Interim Consolidated Statements of Changes in Equity	5
	Condensed Interim Consolidated Statements of Cash Flows	6
	Notes to Condensed Interim Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23
PART II. OTHER INFORMATION		25
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities	25
Item 6.	Exhibits	27
Signatures		28

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

IVANHOE ELECTRIC INC.

Condensed Interim Consolidated Balance Sheets (Unaudited)

(Expressed in thousands of U.S. dollars)


	March 31, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	106,995	$	139,660
Accounts receivable	2,207		1,497
Inventory	5,869		5,648
Prepaid expenses and deposits	3,085		4,226
	118,156		151,031
Non-current assets:
Investments subject to significant influence	6,118		5,998
Other investments	1,656		2,220
Exploration mineral interests	88,520		86,758
Property, plant and equipment	4,214		3,934
Intangible assets	546		1,249
Other non-current assets	8,157		9,296
Total assets	$	227,367	$	260,486

Liabilities and Equity
Current liabilities:
Accounts payable and accrued liabilities	$	12,934	$	13,943
Lease liabilities, current	831		706
Contract liability	3,572		2,783
	17,337		17,432
Non-current liabilities:
Deferred income taxes	3,878		3,888
Convertible debt	26,427		25,918
Due to related party	10,305		10,010
Lease liabilities, net of current portion	294		403
Other non-current liabilities	44		388
Total liabilities	58,285		58,039

Commitments and contingencies (Note 14)

Equity:
Common stock, par value $0.0001; 700.0 million shares authorized; 93.0 million shares issued and outstanding as of March 31, 2023 (December 31, 2022 - 700.0 million shares authorized; 93.0 million issued and outstanding)	9		9
Additional paid-in capital	414,897		409,683
Accumulated deficit	(238,202)		(202,128)
Accumulated other comprehensive income	(1,235)		(1,189)
Equity attributable to common stockholders	175,469		206,375
Non-controlling interests	(6,387)		(3,928)
Total equity	169,082		202,447
Total liabilities and equity	$	227,367	$	260,486

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IVANHOE ELECTRIC INC.

Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (Unaudited)

(Expressed in thousands of U.S. dollars, except for share and per share amounts)


	Three Months Ended March 31,
	2023		2022
Revenue	$	679	$	6,762
Cost of sales	(184)		(52)
Gross profit	495		6,710

Operating expenses:
Exploration expenses	26,559		17,323
General and administrative expenses	10,633		5,226
Research and development expenses	1,843		1,331
Selling and marketing expenses	49		36

Loss from operations	38,589		17,206

Other expenses (income):
Interest (income) expense, net	(32)		762
Foreign exchange (gain) loss	(161)		189
Loss (gain) on revaluation of investments	375		(4,659)
Loss on revaluation of convertible debt	—		2,632
Share of loss of equity method investees	622		—
Other (income) expenses, net	(741)		223

Loss before income taxes	38,652		16,353

Income taxes	(72)		1,321

Net loss	38,580		17,674
Less loss attributable to non-controlling interests	(2,506)		(2,222)
Net loss attributable to common stockholders or parent	36,074		15,452

Net loss	38,580		17,674
Other comprehensive loss (income), net of tax:
Foreign currency translation adjustments	68		(106)
Other comprehensive loss (income)	68		(106)
Comprehensive loss	$	38,648	$	17,568

Comprehensive loss attributable to:
Common stockholders or parent	36,120		15,350
Non-controlling interests	2,528		$	2,218
	$	38,648	$	17,568

Net loss per share attributable to common stockholders
Basic and diluted	$	0.39	$	0.24
Weighted-average common shares outstanding
Basic and diluted	92,964,249		63,925,334

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IVANHOE ELECTRIC INC.

Condensed Interim Consolidated Statements of Changes in Equity (Unaudited)

(Expressed in thousands of U.S. dollars, except share amounts)

Three months ended March 31, 2023 and 2022


				Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive Income (loss)		Non-controlling interest		Total
	Common Stock
	Shares	Amount
Balance at January 1, 2022	63,925,334	$	6	$	75,743	$	(52,314)	$	(1,502)	$	5,881	$	27,814
Net loss	—	—		—		(15,452)		—		(2,222)		(17,674)
Other comprehensive income	—	—		—		—		102		4		106
Share-based compensation	—	—		882		—		—		73		955
Balance at March 31, 2022	63,925,334	$	6	$	76,625	$	(67,766)	$	(1,400)	$	3,736	$	11,201














Balance at January 1, 2023	92,960,584	$	9	$	409,683	$	(202,128)	$	(1,189)	$	(3,928)	$	202,447
Net loss	—	—		—		(36,074)		—		(2,506)		(38,580)
Other comprehensive loss	—	—		—		—		(46)		(22)		(68)
Issuance of common stock; earn-in payment	10,281	—		150		—		—		—		150
Stock options exercised	1,000	—		3		—		—		—		3
Share-based compensation	—	—		5,067		—		—		65		5,132
Other changes in non-controlling interests	—	—		(6)		—		—		4		(2)
Balance at March 31, 2023	92,971,865	$	9	$	414,897	$	(238,202)	$	(1,235)	$	(6,387)	$	169,082

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IVANHOE ELECTRIC INC.

Condensed Interim Consolidated Statements of Cash Flows (Unaudited)

(Expressed in thousands of U.S. dollars)

Three months ended March 31, 2023 and 2022


	2023		2022
Operating activities
Net loss	$	(38,580)	$	(17,674)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation and amortization	1,040		1,053
Share-based compensation	5,132		955
Non-cash exploration expense	662		—
Non-cash research and development expense	645		—
Unrealized foreign exchange (gain) loss	(155)		225
Interest expense	804		758
Income taxes	(72)		1,321
Loss on revaluation of convertible debt	—		2,632
Loss (Gain) on revaluation of investments	375		(4,659)
Share of loss of equity method investees	622		—
Other	(141)		344

Changes in other operating assets and liabilities:
Trade accounts receivable	(710)		253
Inventory	(144)		(449)
Operating lease liabilities	(283)		(267)
Accounts payable and accrued liabilities	(1,108)		1,134
Other operating assets and liabilities	1,894		(245)
Net cash used in operating activities	(30,019)		(14,619)

Investing activities
Purchase of mineral interests	(1,763)		(4,714)
Purchase of property, plant and equipment and intangible assets	(348)		(93)
Purchase of investments subject to significant influence	(555)		(793)
Net cash used in investing activities	(2,666)		(5,600)

Financing activities
Proceeds from exercise of stock options	3		—
Net cash provided by financing activities	3		—

Effect of foreign exchange rate changes on cash and cash equivalents	17		138
Decrease in cash and cash equivalents	(32,665)		(20,081)
Cash and cash equivalents, beginning of the year	139,660		49,850
Cash and cash equivalents, end of the period	$	106,995	$	29,769

Supplemental cash flow information
Cash paid for income taxes	1,069		$	208

Supplemental disclosure of non-cash investing and financing activities
Issuance of common stock; earn-in payment	$	150	$	—

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IVANHOE ELECTRIC INC.

Notes to the Condensed Interim Consolidated Financial Statements

(Unaudited - Tabular amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

1. Background and basis of preparation:

Ivanhoe Electric Inc. (“Ivanhoe Electric” or “the Company”) was incorporated in the State of Delaware, USA, on July 14, 2020. Ivanhoe Electric is a mineral project exploration and development company with a focus on identifying and developing mineral projects, and ultimately mines, associated with the metals necessary for electrification, in particular, copper, nickel, cobalt, vanadium, gold, silver, and the platinum group metals.

The Company’s current mineral projects are located predominantly in the United States. In addition to mineral projects in the United States, the Company also holds direct and indirect ownership interests, and in some cases controlling financial interests, in other non-U.S. mineral projects, and in proprietary mineral exploration and minerals-based technologies.

The Company conducts the following business activities through certain subsidiaries:

•VRB Energy Inc. (“VRB”), develops, manufactures and installs vanadium flow batteries for grid-scale energy storage. Ivanhoe Electric had an ownership interest in VRB of 90.0% as at March 31, 2023 (December 31, 2022 — 90.0%).

•Computational Geosciences Inc. (“CGI”), provides data analytics, geophysical modeling, software licensing and artificial intelligence services for the mineral, oil & gas and water exploration industries. Ivanhoe Electric had an ownership interest in CGI of 94.3% as at March 31, 2023 (December 31, 2022 — 94.3%).

•Cordoba Minerals Corp. (“Cordoba”) holds the San Matias copper-gold-silver project in northern Colombia. Ivanhoe Electric had an ownership interest in Cordoba of 63.3% as at March 31, 2023 (December 31, 2022 — 63.3%).

•Kaizen Discovery Inc. (“Kaizen”) holds the Pinaya copper-gold exploration project in Peru. Ivanhoe Electric had an ownership interest in Kaizen of 82.5% as at March 31, 2023 (December 31, 2022 — 82.7%).

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all information and disclosures required by generally accepted accounting principles in the United States. Therefore, this information should be read in conjunction with the Company's consolidated and combined carve-out financial statements and notes contained on its Form 10-K for the year ended December 31, 2022. The information furnished herein reflects all normal recurring entries, that are in the opinion of management, necessary for a fair statement of the results for the interim periods reported. Operating results for the three month period ended March 31, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Reverse stock split:

In June 2022, the Company’s stockholders approved an amendment to the Company’s certificate of incorporation to effect a reverse stock split of the Company’s outstanding common stock at a ratio of 3-for-1 (the “Reverse Stock Split”) effective as of June 16, 2022. The number of authorized shares and the par value of the common stock were not adjusted as a result of the Reverse Stock Split. For periods before June 16, 2022, all references to common stock, options to purchase common stock, per share data, and related information contained in the condensed interim consolidated financial statements have been retrospectively adjusted to reflect the effect of the Reverse Stock Split.

The condensed interim consolidated financial statements have been prepared on a going concern basis, which presumes the realization of assets and satisfaction of liabilities in the normal course of business.

References to “$” refer to United States dollars and “Cdn$” to Canadian dollars.

2. Significant accounting policies:

The Company discloses in its consolidated financial statements for the year ended December 31, 2022, those accounting policies that it considers significant in determining its results of operations and financial position. There

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IVANHOE ELECTRIC INC.

Notes to the Condensed Interim Consolidated Financial Statements

(Unaudited - Tabular amounts expressed in thousands of U.S. dollars, unless otherwise indicated)

have been no material changes to, or in the application of, the accounting policies previously identified and described in the Company’s consolidated and combined carve-out financial statements for the year ended December 31, 2022.

Recent accounting pronouncements not yet adopted:

In August 2020, the FASB issued ASU 2020-06 Debt — Debt with Conversion and Other Options (Topic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Topic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The update is to address issues identified as a result of the complexity associated with applying generally accepted accounting principles for certain financial instruments with both liability and equity characteristics. The Company is required to adopt ASU 2020-06 for fiscal years beginning after December 15, 2023 and is currently evaluating the expected impact on the consolidated financial statements.

In June 2022, the FASB issued ASU 2022-03 Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The update is to clarify the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security. The update clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The Company intends to adopt ASU 2022-03 on January 1, 2024 and is currently evaluating the expected impact on the consolidated financial statements.

3. Use of estimates:

The preparation of consolidated financial statements requires management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, the related disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual results may differ from these estimates.

The significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated and combined carve-out financial statements for the year ended December 31, 2022.

4. Cash and cash equivalents:

Of the total cash and cash equivalents at March 31, 2023 and December 31, 2022, $10.2 million and $20.7 million, respectively, was not available for the general corporate purposes of the Company as it was held by non-wholly-owned subsidiaries.

At March 31, 2023, the Company does not have any cash equivalents in the form of redeemable short-term investments (December 31, 2022 - $2.3 million).

5. Investments subject to significant influence:

The Company’s principal investment subject to significant influence is Sama Resources Inc. (“Sama”). Others include its investments in Fjordland Exploration Inc. (“Fjordland”) and Sama Nickel Corporation (“SNC”).

Carried at fair value

Equity method

Sama

Fjordland

SNC

Total

Balance at December 31, 2022

4,799

309

890