Ivanhoe Electric Inc 10-Q for FY2023 Q3

Ivanhoe Electric Inc. (IE)

10-Q 2023-11-08 For: 2023-09-30

Added on April 04, 2026

About this 10-Q

Ivanhoe Electric Inc filed this 10-Q on November 8, 2023, covering the quarter ended September 30, 2023 (FY2023 Q3).

Headline figures

Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $239K; down 79.8% from $1.18M a year earlier
Net loss: $83.26M; compared with a net loss of $43.85M a year earlier
Diluted EPS: $0.74; up 72.1% from $0.43 a year earlier

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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)


Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer	x	Smaller reporting company	x

Emerging growth company	x


		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	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29
PART II. OTHER INFORMATION		30
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities	31
Item 6.	Exhibits	32
Signatures		34


	September 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	249,045	$	139,660
Accounts receivable	2,408		1,497
Inventory	4,756		5,648
Prepaid expenses and deposits	4,578		4,226
	260,787		151,031
Non-current assets:
Investments subject to significant influence	41,184		5,998
Other investments	1,641		2,220
Exploration properties	216,295		86,758
Property, plant and equipment	4,678		3,934
Intangible assets	171		1,249
Other non-current assets	8,150		9,296
Total assets	$	532,906	$	260,486

Liabilities and Equity
Current liabilities:
Accounts payable and accrued liabilities	$	22,022	$	13,943
Note payable	37,044		—
Lease liabilities, current	623		706
Contract liability	2,795		2,783
	62,484		17,432
Non-current liabilities:
Note payable	48,325		—
Convertible debt	27,460		25,918
Deferred income taxes	4,404		3,888
Due to related party	—		10,010
Lease liabilities, net of current portion	641		403
Other non-current liabilities	800		388
Total liabilities	144,114		58,039

Commitments and contingencies (Note 15)

Equity:
Common stock, par value $0.0001; 700,000,000 shares authorized; 117.5 million shares issued and outstanding as of September 30, 2023 (December 31, 2022 - 700,000,000 authorized; 93.0 million issued and outstanding)	12		9
Additional paid-in capital	744,478		409,683
Accumulated deficit	(354,345)		(202,128)
Accumulated other comprehensive income	(1,944)		(1,189)
Equity attributable to common stockholders	388,201		206,375
Non-controlling interests	591		(3,928)
Total equity	388,792		202,447
Total liabilities and equity	$	532,906	$	260,486


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenue	$	239	$	1,181	$	2,232	$	8,172
Cost of sales	(275)		(875)		(1,715)		(1,042)
Gross profit	(36)		306		517		7,130

Operating expenses:
Exploration expenses	34,208		33,971		93,318		75,157
General and administrative expenses	11,445		6,853		34,736		16,738
Research and development expenses	1,247		1,140		5,228		3,728
Selling and marketing expenses	36		51		181		108

Loss from operations	46,972		41,709		132,946		88,601

Other expenses (income):
Interest expense, net	1,717		164		2,398		1,199
Foreign exchange (gain) loss	62		972		(1,411)		1,403
(Gain) loss on revaluation of investments	(44)		(171)		(990)		1,272
Loss on revaluation of convertible debt	—		—		—		18,965
Share of losses of equity method investees	34,216		1,527		35,444		3,077
Other (income) expenses, net	337		(181)		(1,500)		1,401

Loss before income taxes	83,260		44,020		166,887		115,918

Income tax (recovery) expense	—		(167)		(200)		1,084

Net loss	83,260		43,853		166,687		117,002
Less loss attributable to non-controlling interests	(5,380)		(3,465)		(14,470)		(6,796)
Net loss attributable to common stockholders or parent	77,880		40,388		152,217		110,206

Net loss	83,260		43,853		166,687		117,002
Other comprehensive loss (income), net of tax:
Foreign currency translation adjustments	(154)		(990)		1,185		(949)
Other comprehensive loss (income)	(154)		(990)		1,185		(949)
Comprehensive loss	$	83,106	$	42,863	$	167,872	$	116,053

Comprehensive loss attributable to:
Common stockholders or parent	77,766		39,673		152,972		109,556
Non-controlling interests	5,340		$	3,190	14,900		$	6,497
	$	83,106	$	42,863	$	167,872	$	116,053

Net loss per share attributable to common stockholders
Basic and diluted	$	0.74	$	0.43	$	1.57	$	1.50
Weighted-average common shares outstanding
Basic and diluted	104,866,006		92,887,918		97,028,679		73,685,619


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


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


				Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive Income (loss)		Non-controlling interest		Total
	Common Stock
	Shares	Amount
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
Net loss	—	—		—		(38,263)		—		(6,584)		(44,847)
Other comprehensive loss	—	—		—		—		(823)		(448)		(1,271)
Stock options exercised	479,909	—		1,194		—		—		—		1,194
Share-based compensation	—	—		5,365		—		—		66		5,431
Settlement of deferred share units	11,990	—		—		—		—		—		—
Non-controlling interests investment in subsidiary	—	—		17,979		—		—		19,174		37,153
Other changes in non-controlling interests	—	—		7		—		—		(1)		6
Balance at June 30, 2023	93,463,764	$	9	$	439,442	$	(276,465)	$	(2,058)	$	5,820	$	166,748
Net loss	—	—		—		(77,880)		—		(5,380)		(83,260)
Other comprehensive loss	—	—		—		—		114		40		154
Issuance of common stock; strategic investment, net of issuance costs	10,269,604	1		123,670		—		—		—		123,671
Issuance of common stock; public offering, net of issuance costs	13,629,629	2		175,540		—		—		—		175,542
Stock options exercised	156,118	—		389		—		—		—		389
Share-based compensation	—	—		5,581		—		—		70		5,651
Other changes in non-controlling interests	—	—		(144)		—		—		41		(103)
Balance at September 30, 2023	117,519,115	$	12	$	744,478	$	(354,345)	$	(1,944)	$	591	$	388,792


	2023		2022
Operating activities
Net loss	$	(166,687)	$	(117,002)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation and amortization	2,133		3,187
Share-based compensation	16,214		2,515
Non-cash exploration expense	1,686		—
Non-cash research and development expense	1,935		—
Unrealized foreign exchange (gain) loss	(1,411)		1,384
Interest expense	4,925		1,542
Income tax (recovery) expense	(200)		1,084
Loss on revaluation of convertible debt	—		18,965
Loss on de-recognition of mineral interest	—		5,700
(Gain) Loss on revaluation of investments	(990)		1,272
Share of losses of equity method investees	35,444		3,077
Other	(400)		1,353
Changes in other operating assets and liabilities:
Trade accounts receivable	(911)		(115)
Inventory	737		(263)
Operating lease liabilities	(718)		(615)
Accounts payable and accrued liabilities	2,616		4,019
Other operating assets and liabilities	(1,345)		(4,880)
Net cash used in operating activities	(106,972)		(78,777)

Investing activities
Purchase of investments subject to significant influence	(67,948)		(3,601)
Purchase of exploration properties	(45,557)		(33,889)
Purchase of property, plant and equipment and intangible assets	(1,142)		(853)
Net cash used in investing activities	(114,647)		(38,343)

Financing activities
Net proceeds from issuance of common stock	299,924		159,320
Proceeds from convertible notes	—		86,200
Non-controlling interests investment in subsidiary	29,454		—
Proceeds from exercise of stock options	1,586		—
Other	—		(12)
Net cash provided by financing activities	330,964		245,508

Effect of foreign exchange rate changes on cash and cash equivalents	40		(572)
Increase in cash and cash equivalents	109,345		128,388
Cash and cash equivalents, beginning of the year	139,660		49,850
Cash and cash equivalents, end of the period	$	249,045	$	177,666

Supplemental cash flow information
Cash paid for income taxes	$	1,188	$	558

Supplemental disclosure of non-cash investing and financing activities
Note payable issued as consideration for land purchase	$	82,590	$	—
Non-controlling interests investment in subsidiary	10,546
Settlement of loan upon issuance of shares of subsidiary	(10,546)		—
Issuance of common stock upon conversion of debt	—		160,140
Issuance of common stock upon settlement of liability	—		11,111


	Equity method						Carried at fair value
	Ma'aden Joint Venture (Note a)		SNC		Go2Lithium (Note b)			Sama		SRQ (Note c)		Fjordland		Total
Balance at December 31, 2022	$	—	$	890	$	—		$	4,799	$	—	$	309	$	5,998
Investment	66,013		1,935		1,133			—		—		—		69,081
Share of losses	(33,199)		(1,996)		(249)			—		—		—		(35,444)
Receipt of shares upon spin-out	—		—		—			—		555		—		555
Change in fair value	—		—		—			563		739		—		1,302
Reclassification to other investments	—		—		—			—		—		(309)		(309)
Foreign currency translation	—		22		(21)			—		—		—		1
Balance at September 30, 2023	$	32,814	$	851	$	863		$	5,362	$	1,294	$	—	$	41,184


	Santa Cruz (Note a)		Tintic		Pinaya		San Matias		Other		Total
Balance at December 31, 2022	$	40,880	$	27,138	$	2,525	$	15,315	$	900	$	86,758
Acquisition costs	125,613		3,525		—		—		400		129,538
Foreign currency translation	—		—		(1)		—		—		(1)
Balance at September 30, 2023	$	166,493	$	30,663	$	2,524	$	15,315	$	1,300	$	216,295


	VRB Convertible bond Note
Balance at December 31, 2022	$	25,918
Interest expense	1,542
Balance at September 30, 2023	$	27,460


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
General and administrative expenses	$	4,711	$	426	$	13,669	$	1,376
Exploration expenses	934		257		2,529		994
Research and development expenses	6		—		11		—
Cost of sales	—		39		5		145
	$	5,651	$	722	$	16,214	$	2,515


		Grant date: February 1, 2023			Grant date: March 1, 2023			Grant date: July 1, 2023			Grant date: August 9, 2023
Exercise price		$	13.23		$	15.46		$	13.04		$	16.03
Number of options granted		500,000			100,000			100,000			200,000
Weighted average assumptions used to value stock option awards:
	Expected volatility	69.8		%	69.5		%	66.2		%	65.4		%
	Expected life of options (in years)	4			4			4			4
	Expected dividend rate	0		%	0		%	0		%	0		%
	Risk-free interest rate	3.73		%	4.52		%	4.41		%	4.35		%
Weighted average grant-date fair value (per option)		$	7.22		$	8.53		$	6.95		$	8.46


	Three Months Ended September 30,				Nine Months Ended September 30,
Revenue type	2023		2022		2023		2022
Software licensing	$	—	$	2	$	400	$	6,713
Data processing services	229		552		550		832
Renewable energy storage systems (Note a)	10		627		1,282		627
Total	$	239	$	1,181	$	2,232	$	8,172


	Three Months Ended September 30,				Nine Months Ended September 30,
Project	2023		2022		2023		2022
Santa Cruz, USA	$	11,079	$	21,811	$	40,804	$	46,372
San Matias, Colombia	7,292		6,000		22,059		11,773
Tintic, USA	6,030		613		9,105		1,309
Hog Heaven, USA	3,512		262		4,566		1,130
Lincoln, USA	1,641		210		2,118		549
White Hill, USA (Note a)	618		—		1,368		—
Carolina, USA	158		501		1,186		1,015
Pinaya, Peru	178		297		828		2,448
Generative exploration and other	3,700		4,277		11,284		10,561
Total	$	34,208	$	33,971	$	93,318	$	75,157


	Balance outstanding as at		Transactions for the three months ended September 30,		Transactions for the nine months ended September 30,
	September 30, 2023	December 31, 2022	2023	2022	2023	2022
Total Expenses
Global Mining (Note a)	893	1,383	2,274	3,485	11,487	9,567
Ivanhoe Capital Aviation (Note b)	—	83	250	250	750	750
I-Pulse (Note c)	1,195	—	1,131	286	3,446	286
Total	2,088	1,466	3,655	4,021	15,683	10,603
Advances
Global Mining (Note a)	2,290	1,987	—	—	—	—
Deposit
I-Pulse (Note c)	4,877	7,128	—	—	—	—
Loan
JCHX Mining Management Co., Ltd (Note d)	—	10,010	—	—	—	—


	Three months ended September 30, 2022								Nine months ended September 30, 2022
	Critical Metals		Data Processing		Energy Storage		Total		Critical Metals		Data Processing		Energy Storage		Total
Revenue	$	—	$	554	$	627	$	1,181	$	—	$	7,545	$	627	$	8,172
Intersegment revenues	—		89		—		89		—		228		—		228
Loss (income) from operations	38,669		640		2,400		41,709		86,552		(3,956)		6,005		88,601
Segment Assets	267,548		6,542		20,712		294,802		267,548		6,542		20,712		294,802


	Three Months Ended September 30,
(In thousands)	2023		2022
Exploration Expenses:
Santa Cruz, USA	$	11,079	$	21,811
San Matias, Colombia	7,292		6,000
Tintic, USA	6,030		613
Hog Heaven, USA	3,512		262
Lincoln, USA	1,641		210
White Hill, USA	618		—
Pinaya, Peru	178		297
Carolina, USA	158		501
Generative exploration and other	3,700		4,277
Total	$	34,208	$	33,971


	Transactions for the three months ended September 30,		Transactions for the nine months ended September 30,
	2023	2022	2023	2022
Expense classification
Exploration expenses	1,441	2,395	7,773	5,925
General and administrative expenses	1,592	1,626	5,980	4,678
Research and development expenses	622	—	1,930	—
	3,655	4,021	15,683	10,603


	September 30, 2023						December 31, 2022
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Financial assets:
Investments subject to significant influence	6,656		—		—		5,108		—		—
Other investments	1,641		—		—		2,220		—		—
Total financial assets	$	8,297	$	—	$	—	$	7,328	$	—	$	—
Financial liabilities:
Total financial liabilities	$	—	$	—	$	—	$	—	$	—	$	—


	Three months ended September 30, 2023								Nine months ended September 30, 2023
	Critical Metals		Data Processing		Energy Storage		Total		Critical Metals		Data Processing		Energy Storage		Total
Revenue	$	—	$	229	$	10	$	239	$	—	$	950	$	1,282	$	2,232
Intersegment revenues	—		37		—		37		—		100		—		100
Loss from operations	44,764		152		2,056		46,972		125,572		1,296		6,078		132,946
Segment Assets	509,887		3,810		19,209		532,906		509,887		3,810		19,209		532,906


	February 1, 2023 Grant Date	March 1, 2023 Grant Date	July 1, 2023 Grant Date	August 9, 2023 Grant Date
Number of options granted	500,000	100,000	100,000	200,000
Exercise price	$13.23	$15.46	$13.04	$16.03
Black-Scholes option-pricing model fair value	$7.22	$8.53	$6.95	$8.46


	Currency by Denomination (in USD Equivalents)
	US dollars		Canadian dollars		Chinese Renminbi		Colombian Pesos		Other		Total
(In thousands)
Jurisdiction of Entity:
USA	$	234,680	$	260	$	—	$	—	$	—	$	234,940
Singapore	8,500		—		—		—		—		8,500
Canada	2,365		504		—		—		—		2,869
Cayman Islands	1,084		3		—		—		—		1,087
China	—		—		743		—		—		743
British Virgin Islands	707		1		—		—		—		709
Other	92		1		—		54		51		197
Total	$	247,429	$	769	$	743	$	54	$	51	$	249,045


Exhibit Number			Description
10.1			Executive Employment Agreement dated July 1, 2023 between the Company and Mark Gibson (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 14, 2023).
10.2			Amended and Restated Executive Employment Agreement dated August 3, 2023 between the Company and Glen Kuntz (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 14, 2023).
10.3			Amended and Restated Executive Employment Agreement dated August 7, 2023 between the Company and Quentin Markin (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 14, 2023).
10.4			Executive Employment Agreement dated August 7, 2023 between the Company and Graham Boyd (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 14, 2023).
10.5			Underwriting Agreement dated as of September 14, 2023 (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 14, 2023).
10.6+			Common Stock Subscription Agreement between Ivanhoe Electric Inc. and Saudi Arabian Mining Company (Ma’aden) dated October 23, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K/A filed with the SEC on October 24, 2023).
10.7			Investor Rights Agreement between Ivanhoe Electric Inc. and Saudi Arabian Mining Company (Ma’aden) dated July 6, 2023 (incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 14, 2023)
10.8			Shareholders Agreement by and among Ivanhoe Electric Inc., Ivanhoe Electric Mena Holdings Ltd., Ma’aden Ivanhoe Electric Exploration and Development Limited Company and Saudi Arabian Mining Company (Ma’aden) dated July 6, 2023 (incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 14, 2023).
10.9			Form of Director Indemnification Agreement (incorporated by reference to Schedule 6 of Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 15, 2023)
10.10			Form of Non-Employee Director Deferred Share Unit Award Agreement (incorporated by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 14, 2023)
31.1*			Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*			Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*			Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*			Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
96.1			Technical Report Summary on the Santa Cruz Project, Arizona, U.S.A., SRK Consulting (U.S.), Inc., KCB Consultants Ltd., Life Cycle Geo, LLC, M3 Engineering and Technology Corp., Nordmin Engineering Ltd., Call & Nicholas, Inc., Tetra Tech, Inc., INTERA Incorporated, Haley & Aldrich, Inc., and Met Engineering, LLC, dated of September 6, 2023 (incorporated by reference to Exhibit 96.1 to the Company’s Current Report on 8-K filed with the SEC on September 6, 2023).
101.INS			Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH			Inline XBRL Taxonomy Extension Schema Document
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document
104			Cover Page Interactive Data File (embedded within the Inline XBRL document)


Date: November 7, 2023	By:	/s/ Taylor Melvin
		Taylor Melvin
		Chief Executive Officer
		(Principal Executive Officer)


Date: November 7, 2023	By:	/s/ Jordan Neeser
		Jordan Neeser
		Chief Financial Officer
		(Principal Financial Officer)


1.			I have reviewed this quarterly report on Form 10-Q for the Quarter ended September 30, 2023 of Ivanhoe Electric Inc.;


2.			Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.			Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.			The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:


			a.			Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


			b.			Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


			c.			Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.


			a.			All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


			b.			Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


			(1)			The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


			(2)			The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.