Ivanhoe Electric Inc 10-Q for FY2022 Q2

Ivanhoe Electric Inc. (IE)

10-Q 2022-08-12 For: 2022-06-30

Added on April 04, 2026

About this 10-Q

Ivanhoe Electric Inc filed this 10-Q on August 12, 2022, covering the quarter ended June 30, 2022 (FY2022 Q2).

Headline figures

Quarter ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $229K; down 84.7% from $1.5M a year earlier
Net loss: $55.48M; compared with a net loss of $13.02M a year earlier
Diluted EPS: $0.85; up 372.2% from $0.18 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)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		IE		NYSE American, Toronto Stock Exchange

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

Emerging growth company	☒

		Page
PART I. FINANCIAL INFORMATION		3
Item 1.	Condensed Consolidated Financial Statements	3
	Condensed Interim Consolidated Balance Sheets	3
	Condensed Interim Consolidated and Combined Carve-out Statements of Loss and Comprehensive Loss	4
	Condensed Interim Consolidated and Combined Carve-out Statements of Changes in Equity	5
	Condensed Interim Consolidated and Combined Carve-out Statements of Cash Flows	6
	Notes to Condensed Consolidated and Combined Carve-out Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25
PART II. OTHER INFORMATION		27
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities	27


	June 30,		December 31,
	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	223,833	$	49,850
Accounts receivable		1,139		1,385
Inventory		6,344		5,878
Prepaid expenses, deposits and other		8,079		1,152
		239,395		58,265
Non-current assets:
Investments subject to significant influence		6,837		7,701
Other investments		1,605		1,802
Exploration mineral interests		82,269		73,039
Property, plant and equipment		3,443		2,523
Intangible assets		2,788		4,340
Other non-current assets		4,657		5,861
Total assets	$	340,994	$	153,531

Liabilities and Equity
Current liabilities:
Accounts payable and accrued liabilities	$	20,503	$	10,195
Deferred consideration payable		—		26,562
Lease liabilities, current		405		342
Contract liability		3,275		3,484
		24,183		40,583
Non-current liabilities:
Deferred income taxes		4,952		5,382
Convertible debt		24,879		78,832
Lease liabilities, net of current portion		751		55
Other non-current liabilities		371		865
Total liabilities		55,136		125,717

Commitments and contingencies (Note 15)

Equity:
Preferred stock, par value $0.0001; 50,000,000 shares authorized; none issued and outstanding		—		—
Common stock, par value $0.0001; 700,000,000 shares authorized; 92.9 million shares issued and outstanding as of June 30, 2022 (December 31, 2021 - 63.9 million)		9		6
Additional paid-in capital		406,851		75,743
Accumulated deficit		(122,132)		(52,314)
Accumulated other comprehensive income		(1,567)		(1,502)
Equity attributable to common stockholders		283,161		21,933
Non-controlling interests		2,697		5,881
Total equity		285,858		27,814
Total liabilities and equity	$	340,994	$	153,531


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


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


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenue	$	229	$	1,495	$	6,991	$	3,054
Cost of sales		(115)		(324)		(167)		(641)
Gross profit		114		1,171		6,824		2,413

Operating expenses:
Exploration expenses		23,863		8,348		41,186		14,609
General and administrative expenses		4,659		3,425		9,885		6,220
Research and development expenses		1,257		756		2,588		1,712
Selling and marketing expenses		21		22		57		45

Loss from operations		29,686		11,380		46,892		20,173

Other expenses (income):
Interest expense, net		523		26		1,035		115
Foreign exchange loss (gain)		242		22		431		(354)
Loss on revaluation of investments		6,102		1,475		1,443		258
Loss on revaluation of convertible debt		16,083		—		18,965		—
Share of loss of equity method investees		1,550		—		1,550		—
Other expenses, net		1,359		67		1,582		(422)

Loss before income taxes		55,545		12,970		71,898		19,770

Income taxes		(70)		52		1,251		(184)

Net loss		55,475		13,022		73,149		19,586
Less loss attributable to non-controlling interests		(1,109)		(2,286)		(3,331)		(4,197)
Net loss attributable to common stockholders or parent		54,366		10,736		69,818		15,389

Net loss		55,475		13,022		73,149		19,586
Other comprehensive income, net of tax:
Foreign currency translation adjustments		147		206		41		198
Other comprehensive income		147		206		41		198
Comprehensive loss	$	55,622	$	13,228	$	73,190	$	19,784

Comprehensive loss attributable to:
Common stockholders or parent		54,533		10,912		69,883		15,551
Non-controlling interests		1,089	$	2,316		3,307	$	4,233
	$	55,622	$	13,228	$	73,190	$	19,784

Net loss per share attributable to common stockholders
Basic and diluted	$	0.85	$	0.18	$	1.09	$	0.26
Weighted-average common shares outstanding
Basic and diluted		64,243,603		59,909,344		64,085,348		59,909,344


										Accumulated
				Additional						other
	Common Stock			paid-in		Net parent		Accumulated		comprehensive		Non-controlling
	Shares	Amount		capital		investment		deficit		income(loss)		interest		Total
Balance at January 1, 2021	—	$	—	$	—	$	43,520	$	—	$	(1,538)	$	6,710	$	48,692

Net loss	—		—		—		(4,653)		—		—		(1,911)		(6,564)
Other comprehensive income (loss)	—		—		—		—		—		13		(5)		8
Net transfer from parent	—		—		—		5,606		—		—		—		5,606
Other changes in non-controlling interests	—		—		—		—		—		—		398		398
Balance at March 31, 2021	—		—		—		44,473		—		(1,525)		5,192		48,140

Net loss	—		—		—		(2,353)		(8,383)		—		(2,286)		(13,022)
Other comprehensive loss	—		—		—		—		—		(175)		(31)		(206)
Net transfer from parent	—		—		—		23,534		—		—		—		23,534
Restructuring upon spin off (Note 1)	—		6		65,648		(65,654)		—		—		—		—
Share based compensation	—		—		236		—		—		—		80		316
Other changes in non-controlling interests	—		—		(28)		—		—		—		1,567		1,539
Balance at June 30, 2021	—	$	6	$	65,856	$	—	$	(8,383)	$	(1,700)	$	4,522	$	60,301

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

Net loss	—		—		—		—		(54,366)		—		(1,109)		(55,475)
Other comprehensive income (loss)	—		—		—		—		—		(167)		20		(147)
Issuance of common stock, net of issuance costs	14,388,000		2		158,200		—		—		—		—		158,202
Issuance of common stock upon conversion of debt	13,628,958		1		160,139		—		—		—		—		160,140
Issuance of common stock upon settlement of liability	945,626		—		11,111		—		—		—		—		11,111
Share-based compensation	—		—		784		—		—		—		54		838
Other changes in non-controlling interests	—		—		(8)		—		—		—		(4)		(12)
Balance at June 30, 2022	92,887,918	$	9	$	406,851	$	—	$	(122,132)	$	(1,567)	$	2,697	$	285,858


	Six months ended June 30,
	2022		2021
Operating activities
Net loss	$	(73,149)	$	(19,586)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation of property, plant and equipment		410		218
Amortization of intangible assets		1,506		1,435
Amortization of operating lease right-of-use-assets		372		328
Share-based compensation		1,793		1,103
Unrealized foreign exchange (gain) loss		392		(225)
Interest expense		1,022		130
Income taxes		1,251		(184)
Loss on revaluation of convertible debt		18,965		—
Loss on revaluation of investments		1,443		258
Share of loss of equity method investees		1,550		—
Other		1,566		(1,215)

Changes in other operating assets and liabilities:
Trade accounts receivable		247		(373)
Inventory		(466)		(659)
Operating lease liabilities		(430)		(375)
Accounts payable and accrued liabilities		(102)		2,092
Other operating assets and liabilities		(567)		170
Net cash used in operating activities		(44,197)		(16,883)

Investing activities
Purchase of mineral interests		(25,727)		(3,050)
Purchase of property, plant and equipment and intangible assets		(615)		(1,707)
Purchase of investments subject to significant influence		(1,962)		—
Other		(110)		(515)
Net cash used in investing activities		(28,414)		(5,272)

Financing activities
Net proceeds from issuance of common stock		160,576		—
Proceeds from convertible notes		86,200		—
Net transfer from parent		—		23,152
Proceeds from subsidiary financings		—		1,382
Other		(12)		—
Net cash provided by financing activities		246,764		24,534

Effect of foreign exchange rate changes on cash and cash equivalents		(170)		124
Increase in cash and cash equivalents		174,153		2,379
Cash and cash equivalents, beginning of the year		49,850		9,341
Cash and cash equivalents, end of the period	$	223,833	$	11,844

Supplemental cash flow information
Cash paid for income taxes	$	438	$	348

Supplemental disclosure of non-cash investing and financing activities
Issuance of common stock upon conversion of debt	$	160,140	$	—
Issuance of common stock upon settlement of liability		11,111		—
Settlement of loan from parent		—		5,886
Issuance of common stock in exchange for assets (Note 1)		—		65,654


	Carried at fair value				Equity method
	Sama		Fjordland		SNC		Total
Balance at January 1, 2022		5,719		1,325		657		7,701
Change in fair value		(481)		(769)		—		(1,250)
Investment during the period		—		—		1,962		1,962
Share of loss		—		—		(1,551)		(1,551)
Foreign currency translation		—		(13)		(12)		(25)
Balance at June 30, 2022	$	5,238	$	543	$	1,056	$	6,837


	Santa Cruz		Tintic Project		San Matias		Pinaya Project		Mineral Royalty		Other		Total
Balance at December 31, 2021	$	35,075	$	19,588	$	13,607	$	2,511	$	1,708	$	550	$	73,039
Acquisition costs		4,952		4,025		—		—		—		250		9,227
Foreign currency translation		—		—		—		3		—		—		3
Balance at June 30, 2022	$	40,027	$	23,613	$	13,607	$	2,514	$	1,708	$	800	$	82,269


	Series 1		Series 2		VRB
	Convertible		Convertible		Convertible
	Notes (Note a)		Notes (Note a)		bond (Note b)		Total

Balance at December 31, 2021	$	54,975	$	—	$	23,857	$	78,832
Issuance of Series 2 Convertible Notes		—		86,200		—		86,200
Interest expense		—		—		1,022		1,022
Fair value adjustments		8,709		10,256		—		18,965
Conversion to common stock		(63,684)		(96,456)		—		(160,140)
Balance at June 30, 2022	$	—	$	—	$	24,879	$	24,879


	Three months ended				Six months ended
	June 30:				June 30:
Revenue type	2022		2021		2022		2021
Software licensing (Note a)	$	9	$	—	$	6,711	$	—
Data processing services		220		1,464		280		2,950
Renewable energy storage systems (Note b)		—		31		—		104
Total	$	229	$	1,495	$	6,991	$	3,054


			Transactions for the		Transactions for the
			three months ended		six months ended
	Balance outstanding as at		June 30,		June 30,
	June 30,	December 31,
	2022	2021	2022	2021	2022	2021
Total Expenses
Global Mining (Note a)	1,208	993	3,345	1,803	6,082	3,250
Ivanhoe Capital Aviation (Note b)	—	—	250	—	500	—
HPX (Note c)	—	—	—	487	—	487
Total	1,208	993	3,595	2,290	6,582	3,737
Advances
Global Mining (Note a)	1,833	1,855	—	—	—	—


	Three months ended				Six months ended
	June 30:				June 30:
Project	2022		2021		2022		2021
Santa Cruz, USA	$	14,763	$	237	$	24,561	$	434
San Matias, Colombia		3,397		3,653		5,773		6,824
Pinaya, Peru		1,465		502		2,151		718
Perseverance, USA		166		44		1,659		98
Hog Heaven, USA		308		681		868		1,321
Tintic, USA		407		678		696		1,042
Yangayu, Papua New Guinea		333		—		651		—
Carolina, USA		316		—		514		—
Bitter Creek, USA		149		55		508		68
Lincoln, USA		326		—		339		—
Ivory Coast Project, Ivory Coast		5		1,443		26		1,930
Project generation and other		2,228		1,055		3,440		2,174
Total	$	23,863	$	8,348	$	41,186	$	14,609


	Three months ended June 30, 2022								Six months ended June 30, 2022
	Critical		Data		Energy				Critical		Data		Energy
	Metals		Processing		Storage		Total		Metals		Processing		Storage		Total
Revenue	$	—	$	229	$	—	$	229	$	—	$	6,991	$	—	$	6,991
Intersegment revenues		—		96		—		96		—		139		—		139
Loss (income) from operations		27,103		953		1,630		29,686		47,883		(4,596)		3,605		46,892
Segment Assets		309,574		7,259		24,161		340,994		309,574		7,259		24,161		340,994


	Three months ended June 30, 2021								Six months ended June 30, 2021
	Critical		Data		Energy				Critical		Data		Energy
	Metals		Processing		Storage		Total		Metals		Processing		Storage		Total
Revenue	$	—	$	1,464	$	31	$	1,495	$	—	$	2,950	$	104	$	3,054
Intersegment revenues		—		16		—		16		—		44		—		44
Loss (income) from operations		10,351		(101)		1,130		11,380		18,140		(282)		2,315		20,173
Segment Assets		59,522		9,245		9,256		78,023		59,522		9,245		9,256		78,023


	Transactions for the		Transactions for the six
	three months ended		months ended
	June 30,		June 30,
	2022	2021	2022	2021
Expense classification
General and administrative expenses	1,580	1,153	3,052	1,935
Exploration expenses	2,015	1,137	3,530	1,802
	3,595	2,290	6,582	3,737


	June 30, 2022						December 31, 2021
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Financial assets:
Investments subject to significant influence		5,781		—		—		7,044		—		—
Other investments		1,605		—		—		1,802		—		—
Total financial assets	$	7,386	$	—	$	—	$	8,846	$	—	$	—
Financial liabilities:
Convertible notes		—		—		—		—		—		54,975
Deferred consideration payable		—		—		—		—		—		26,562
Total financial liabilities	$	—	$	—	$	—	$	—	$	—	$	81,537


			Three months
	Three months ended		ended June 30,		Percentage change
	June 30, 2022		2021		year-over-year
(In thousands)
CGI: Software licensing and data processing services:
Revenue	$	229	$	1,464	(84)	%
Cost of sales		(115)		(295)	(61)	%
Gross profit	$	114	$	1,169	(90)	%
VRB: Energy storage systems:
Revenue	$	—	$	31	(100)	%
Cost of sales		—		(29)	(100)	%
Gross profit	$	—	$	2	(100)	%
Total:
Revenue	$	229	$	1,495	(85)	%
Cost of sales		(115)		(324)	(65)	%
Gross profit	$	114	$	1,171	(90)	%


Mineral Project	Commitment	2022		2023		2024		2025		2026-2032		Total
In $ thousands)
Santa Cruz (USA)	Discretionary	$	18,665	$	6,550	$	10,300	$	596	$	—	$	36,111
Santa Cruz (USA)	Non-discretionary		600		800		920		—		—		2,320
Total Santa Cruz (USA)			19,265		7,350		11,220		596		—		38,431
Tintic (USA)	Discretionary		1,762		5,288		—		—		—		7.050
Hog Heaven (Montana)	Discretionary		—		3,500		500		500		39,000		43,500
Ivory Coast (Ivory Coast)	Discretionary		—		—		—		—		7,762		7,762
South Voisey’s Bay (Canada)	Discretionary		—		—		4,416		—		—		4,416
Crystal Haven (Australia)	Discretionary		—		7,000		—		35,000		—		42,000
Unity (USA)	Discretionary		—		2,000		2,250		—		—		4,250
Cave & Lincoln (USA)	Discretionary		100		150		200		250		2,250		2,950
Carolina Mining (USA)	Discretionary		—		—		—		5,000		20,000		25,000
Total			21,127		25,288		18,586		41,346		69,012		175,359


	Currency by Denomination (in USD Equivalents)
			Canadian		Chinese
	US dollars		dollars		Renminbi		Other		Total
(In $ thousands)
Jurisdiction of Entity:
USA	$	200,421	$	1,407	$	—	$	—	$	201,828
Cayman Islands		12,702		8		—		—		12,710
Canada		3,979		4,020		—		—		7,999
China		—		—		438		—		438
British Virgin Islands		387		1		—		—		388
Other		264		1		—		205		470
Total		217,753		5,437		438		205		223,833


	Payments due by period (in thousands)
			Less than						More than
	Total		1 year		1-3 years		4-5 years		5 years
Long-term debt obligations (a)	$	24,000	$	—	$	—	$	24,000	$	—
Leases		1,179		405		765		9		—
Other long-term contractual liabilities (b)		371		—		371		—		—
Total contractual obligations	$	25,550	$	405	$	1,136	$	24,009	$	—


Exhibit Number		Description
3.1		Amended and Restated Certificate of Incorporation of Ivanhoe Electric Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 27, 2022)
3.2		Amended and Restated Bylaws of Ivanhoe Electric Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed with the SEC on June 27, 2022)
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.
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: August 12, 2022	By:	/s/ Robert Friedland
		Robert Friedland
		Chief Executive Officer
		(Principal Executive Officer)


Date: August 12, 2022	By:	/s/ Catherine Barone
		Catherine Barone
		Interim Chief Financial Officer
		(Principal Financial Officer)


Date: August 12, 2022

	By:	/s/ Robert Friedland
		Robert Friedland
		Chief Executive Officer


Date: August 12, 2022

	By:	/s/ Catherine Barone
		Catherine Barone
		Interim Chief Financial Officer