Ivanhoe Electric Inc 10-Q for FY2023 Q1
Ivanhoe Electric Inc. (IE)
10-Q
2023-05-15
For: 2023-03-31
View Original
Added on
April 04, 2026
About this 10-Q
Ivanhoe Electric Inc filed this 10-Q on May 15, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).
Headline figures
Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $679K
- down 90.0% from $6.76M a year earlier
- Net loss
- $38.58M
- compared with a net loss of $17.67M a year earlier
- Diluted EPS
- $0.39
- up 62.5% from $0.24 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended March 31, 2023
OR
| 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
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
| (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 | ||||||||||||
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 | ||||||||
| x | Smaller reporting company | ||||||||||
| Emerging growth company | |||||||||||
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 | ||||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |||||||
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 | $ | $ | |||||||||
| Accounts receivable | |||||||||||
| Inventory | |||||||||||
| Prepaid expenses and deposits | |||||||||||
| Non-current assets: | |||||||||||
| Investments subject to significant influence | |||||||||||
| Other investments | |||||||||||
| Exploration mineral interests | |||||||||||
| Property, plant and equipment | |||||||||||
| Intangible assets | |||||||||||
| Other non-current assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and accrued liabilities | $ | $ | |||||||||
| Lease liabilities, current | |||||||||||
| Contract liability | |||||||||||
| Non-current liabilities: | |||||||||||
| Deferred income taxes | |||||||||||
| Convertible debt | |||||||||||
| Due to related party | |||||||||||
| Lease liabilities, net of current portion | |||||||||||
| Other non-current liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies (Note 14) | |||||||||||
| Equity: | |||||||||||
Common stock, par value $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Accumulated other comprehensive income | ( | ( | |||||||||
| Equity attributable to common stockholders | |||||||||||
| Non-controlling interests | ( | ( | |||||||||
| Total equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
3
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 | $ | $ | |||||||||||||||||||||
| Cost of sales | ( | ( | |||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Exploration expenses | |||||||||||||||||||||||
| General and administrative expenses | |||||||||||||||||||||||
| Research and development expenses | |||||||||||||||||||||||
| Selling and marketing expenses | |||||||||||||||||||||||
| Loss from operations | |||||||||||||||||||||||
| Other expenses (income): | |||||||||||||||||||||||
| Interest (income) expense, net | ( | ||||||||||||||||||||||
| Foreign exchange (gain) loss | ( | ||||||||||||||||||||||
| Loss (gain) on revaluation of investments | ( | ||||||||||||||||||||||
| Loss on revaluation of convertible debt | |||||||||||||||||||||||
| Share of loss of equity method investees | |||||||||||||||||||||||
| Other (income) expenses, net | ( | ||||||||||||||||||||||
| Loss before income taxes | |||||||||||||||||||||||
| Income taxes | ( | ||||||||||||||||||||||
| Net loss | |||||||||||||||||||||||
| Less loss attributable to non-controlling interests | ( | ( | |||||||||||||||||||||
| Net loss attributable to common stockholders or parent | |||||||||||||||||||||||
| Net loss | |||||||||||||||||||||||
| Other comprehensive loss (income), net of tax: | |||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ||||||||||||||||||||||
| Other comprehensive loss (income) | ( | ||||||||||||||||||||||
| Comprehensive loss | $ | $ | |||||||||||||||||||||
| Comprehensive loss attributable to: | |||||||||||||||||||||||
| Common stockholders or parent | |||||||||||||||||||||||
| Non-controlling interests | $ | ||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||
| Net loss per share attributable to common stockholders | |||||||||||||||||||||||
| Basic and diluted | $ | $ | |||||||||||||||||||||
| Weighted-average common shares outstanding | |||||||||||||||||||||||
| Basic and diluted | |||||||||||||||||||||||
4
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 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2022 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||
| Balance at January 1, 2023 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Issuance of common stock; earn-in payment | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Stock options exercised | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Other changes in non-controlling interests | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||
| Balance at March 31, 2023 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||
5
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 | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net loss to cash provided by (used in) operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Share-based compensation | |||||||||||
| Non-cash exploration expense | |||||||||||
| Non-cash research and development expense | |||||||||||
| Unrealized foreign exchange (gain) loss | ( | ||||||||||
| Interest expense | |||||||||||
| Income taxes | ( | ||||||||||
| Loss on revaluation of convertible debt | |||||||||||
| Loss (Gain) on revaluation of investments | ( | ||||||||||
| Share of loss of equity method investees | |||||||||||
| Other | ( | ||||||||||
| Changes in other operating assets and liabilities: | |||||||||||
| Trade accounts receivable | ( | ||||||||||
| Inventory | ( | ( | |||||||||
| Operating lease liabilities | ( | ( | |||||||||
| Accounts payable and accrued liabilities | ( | ||||||||||
| Other operating assets and liabilities | ( | ||||||||||
| Net cash used in operating activities | ( | ( | |||||||||
| Investing activities | |||||||||||
| Purchase of mineral interests | ( | ( | |||||||||
| Purchase of property, plant and equipment and intangible assets | ( | ( | |||||||||
| Purchase of investments subject to significant influence | ( | ( | |||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Financing activities | |||||||||||
| Proceeds from exercise of stock options | |||||||||||
| Net cash provided by financing activities | |||||||||||
| Effect of foreign exchange rate changes on cash and cash equivalents | |||||||||||
| Decrease in cash and cash equivalents | ( | ( | |||||||||
| Cash and cash equivalents, beginning of the year | |||||||||||
| Cash and cash equivalents, end of the period | $ | $ | |||||||||
| Supplemental cash flow information | |||||||||||
| Cash paid for income taxes | $ | ||||||||||
| Supplemental disclosure of non-cash investing and financing activities | |||||||||||
| Issuance of common stock; earn-in payment | $ | $ | |||||||||
6
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:
7
IVANHOE ELECTRIC INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Unaudited - Tabular amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
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.
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 | |||||||||||||||||||||||
| Change in fair value | — | ||||||||||||||||||||||
| Investment | — | — | |||||||||||||||||||||
| Share of loss | — | — | ( | ( | |||||||||||||||||||
| Foreign currency translation | ( | ( | |||||||||||||||||||||
| Balance at March 31, 2023 | $ | $ | $ | $ | |||||||||||||||||||
8
IVANHOE ELECTRIC INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Unaudited - Tabular amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
6. Exploration mineral interests:
| Santa Cruz | Tintic | Pinaya | San Matias | Other | Total | ||||||||||||||||||||||||||||||
| Balance at December 31, 2022 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Acquisition costs | |||||||||||||||||||||||||||||||||||
| Foreign currency translation | ( | ( | |||||||||||||||||||||||||||||||||
| Balance at March 31, 2023 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
7. Convertible debt:
| VRB Convertible Bond | |||||||||||||||||
| Balance at December 31, 2022 | $ | ||||||||||||||||
| Interest expense | |||||||||||||||||
| Balance at March 31, 2023 | $ | ||||||||||||||||
On July 8, 2021, VRB issued a convertible bond for gross proceeds of $24.0 million. The bond has a five-year term and interest accrues at a rate of 8 % per annum.
Prior to the maturity date, the convertible bond is automatically converted into equity of VRB upon an equity financing or sale event, at a price per share equal to the lower of:
•the transaction price of the equity financing or sale event; and
•the valuation cap price of $158.0 million divided by the total shares outstanding at the time of the event.
If no equity financing or sale event occurs, VRB must repay the outstanding principal and interest on maturity.
The Company has accounted for the convertible bond, including its embedded features, as a debt instrument accounted at amortized cost, as it was determined the embedded features are not required to be bifurcated.
Directly attributable transaction costs of $1.1 million were recorded against the carrying value of the debt and are amortized using the effective interest method at a rate of 9.1 %.
8. Equity:
(a) Stock-based compensation:
(i) Stock options:
During the three months ended March 31, 2023, the Company granted stock options to certain new management of the Company. The options have a seven-year term and comprise three equal tranches vesting in one-third annual increments beginning one year from the grant date. The stock options were granted at an exercise price equal to the closing stock price on the grant date.
The fair value of each stock option is estimated on the date of grant using the Black-Scholes option valuation model. Expected volatility was calculated based on the historical volatility of a group of peer companies’ common stock and a group of relevant stock market indices over the expected option life. Management exercised judgment in determining the expected life of the options and considered factors such as the contractual term of the options, the vesting schedule and expected volatility. The risk-free interest rate is based on Federal Reserve rates in effect for bonds with maturity dates equal to the expected term of the option.
9
IVANHOE ELECTRIC INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Unaudited - Tabular amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
| Grant date: February 1, 2023 | Grant date: March 1, 2023 | ||||||||||
| Exercise price | $ | $ | |||||||||
| Number of options granted | |||||||||||
| Weighted average assumptions used to value stock option awards: | |||||||||||
| Expected volatility | % | % | |||||||||
| Expected life of options (in years) | |||||||||||
| Expected dividend rate | % | % | |||||||||
| Risk-free interest rate | % | % | |||||||||
| Weighted average grant-date fair value (per option) | $ | $ | |||||||||
(ii) Stock settled restricted stock units ("RSUs"):
On January 1, 2023, Ivanhoe Electric granted 750,000 stock-settled RSUs to a new executive of the Company. The RSUs comprise five equal tranches vesting in one-fifth annual increments beginning one year from the grant date. The fair value of the stock-settled RSUs is amortized over the vesting period. The total fair value of the January 1, 2023 RSU grant was $9.1 million.
9. Revenue:
The Company recognized revenue from the following sources:
| Three months ended March 31: | ||||||||||||||||||||||||||
| Revenue type | 2023 | 2022 | ||||||||||||||||||||||||
| Software licensing | $ | $ | ||||||||||||||||||||||||
| Data processing services | ||||||||||||||||||||||||||
| Renewable energy storage systems (Note a) | ||||||||||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||||||||
(a)At March 31, 2023, the Company had a contract liability of $3.6 million (December 31, 2022 — $2.8 million) relating to the sale of renewable energy storage systems.
10
IVANHOE ELECTRIC INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Unaudited - Tabular amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
10. Exploration expense:
| Three months ended March 31: | ||||||||||||||||||||||||||
| Project | 2023 | 2022 | ||||||||||||||||||||||||
| Santa Cruz, USA | $ | $ | ||||||||||||||||||||||||
| San Matias, Colombia | ||||||||||||||||||||||||||
| Tintic, USA | ||||||||||||||||||||||||||
| Hog Heaven, USA | ||||||||||||||||||||||||||
| White Hill, USA (Note a) | ||||||||||||||||||||||||||
| Lincoln, USA | ||||||||||||||||||||||||||
| Carolina, USA | ||||||||||||||||||||||||||
| Pinaya, Peru | ||||||||||||||||||||||||||
| Generative exploration and other | ||||||||||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||||||||
(a)White Hill project:
11. Related party transactions:
Related parties include entities with common direct or indirect shareholders and/or directors. Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions.
The following table summarizes transactions between the Company and significant related parties.
| Balance outstanding as at | Transactions for the three months ended March 31, | ||||||||||||||||||||||||||||||||||
| March 31, 2023 | December 31, 2022 | 2023 | 2022 | ||||||||||||||||||||||||||||||||
| Total Expenses | |||||||||||||||||||||||||||||||||||
| Global Mining (Note a) | |||||||||||||||||||||||||||||||||||
| Ivanhoe Capital Aviation (Note b) | |||||||||||||||||||||||||||||||||||
| I-Pulse (Note c) | |||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||
| Advances | |||||||||||||||||||||||||||||||||||
| Global Mining (Note a) | — | — | |||||||||||||||||||||||||||||||||
| Deposit | |||||||||||||||||||||||||||||||||||
| I-Pulse (Note c) | — | — | |||||||||||||||||||||||||||||||||
| Loan | |||||||||||||||||||||||||||||||||||
| JCHX Mining Management Co., Ltd (Note d) | — | — | |||||||||||||||||||||||||||||||||
11
IVANHOE ELECTRIC INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Unaudited - Tabular amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
| Transactions for the three months ended March 31, | |||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||
| Expense classification | |||||||||||||||||||||||
| Exploration expenses | |||||||||||||||||||||||
| General and administrative expenses | |||||||||||||||||||||||
| Research and development expenses | |||||||||||||||||||||||
(a)Global Mining Management Corp. (“Global Mining”) is a private company based in Vancouver, Canada, that provides administration, accounting, and other office services to the Company on a cost-recovery basis. The Company held 7.1 % of Global Mining’s outstanding common shares at March 31, 2023 (December 31, 2022 — 7.1 %).
(b)Ivanhoe Capital Aviation (“ICA”) is an entity beneficially owned by the Company’s Executive Chairman. ICA provides use of its aircraft to the Company.
(c)I-Pulse Inc. (“I-Pulse”) is a significant shareholder of the Company. On October 24, 2022 the Company entered into an agreement with I-Pulse, to purchase six Typhoon™ transmitters to be delivered in stages over approximately three years . The total purchase price for the six Typhoon™ transmitters is $12.4 million, which includes research and development costs of $2.8 million. The agreement also includes annual maintenance costs of $1.7 million per year. The Company is recognizing the research and development costs and annual maintenance costs on a straight line basis in the condensed interim consolidated statement of loss. In October 2022, the Company made deposit payments totaling $7.1 million, representing 50 % of each component of the agreement. The remaining payments will be made as each Typhoon™ transmitter system is delivered.
(d)JCHX Mining Management Co., Ltd (“JCHX") held 19.9 % of Cordoba’s issued and outstanding common stock as at March 31, 2023 (December 31, 2022 - 19.9 %).
In December 2022, JCHX advanced a bridge loan of US$10 million to Cordoba. The bridge loan is for an 18-month term and bears interest at 12 % per annum during the first 12 months of the term and 14 % per annum during the remaining six months.
Upon closing the project financing transaction described in Note 15, all of the principal and interest outstanding on the bridge loan was applied towards that transaction’s first installment as a payment in kind.
In the event the bridge loan was not repaid, JCHX had the option to receive payment in kind equal to 20 % of the total issued shares of CMH Colombia S.A.S. (“CMH”), a Colombian subsidiary of Cordoba.
12. Fair value measurement:
The following table provides the valuation hierarchy classification of assets and liabilities that are recorded at fair value and measured on a recurring basis in the combined balance sheets:
| March 31, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||||||||||||||
| Investments subject to significant influence | |||||||||||||||||||||||||||||||||||
| Other investments | |||||||||||||||||||||||||||||||||||
| Total financial assets | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||||||||||||||
| Total financial liabilities | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
12
IVANHOE ELECTRIC INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Unaudited - Tabular amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
13. Segment reporting:
The Company’s President & Chief Executive Officer and its Executive Chairman combine to form the Chief Operating Decision Maker (“CODM”) of the Company. The CODM evaluates how the Company allocates resources, assesses performance and makes strategic and operational decisions. Based upon such evaluation, the Company has determined that it has three reportable segments. The Company’s reportable segments are critical metals, data processing and energy storage.
Critical metals is focused on mineral project exploration and development with a focus on identifying and developing mineral projects, and ultimately mines, associated with the metals necessary for electrification.
The data processing segment provides data analytics, geophysical modeling, software licensing and artificial intelligence services for the mineral, oil & gas and water exploration industries.
The energy storage segment develops, manufactures and installs vanadium flow batteries for grid-scale energy storage.
Segment information for the periods presented is as follows:
| Three months ended March 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
| Critical Metals | Data Processing | Energy Storage | Total | ||||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
| Intersegment revenues | |||||||||||||||||||||||||||||||||||||||||||||||
| Loss (income) from operations | |||||||||||||||||||||||||||||||||||||||||||||||
| Segment Assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Critical Metals | Data Processing | Energy Storage | Total | ||||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
| Intersegment revenues | |||||||||||||||||||||||||||||||||||||||||||||||
| Loss (income) from operations | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Segment Assets | |||||||||||||||||||||||||||||||||||||||||||||||
14. Commitments and contingencies:
The Company has entered into a contractual arrangement to purchase six Typhoon™ transmitters from I-Pulse (Note 11).
In the ordinary course of business, the Company may be involved in various legal proceedings and subject to claims that arise. Although the results of litigation and claims are inherently unpredictable and uncertain, the Company is not currently a party to any legal proceedings the outcome of which, if determined adversely to it, are believed to, either individually or taken together, have a material adverse effect on the Company’s business, financial condition or results of operations.
15. Subsequent events:
(a) On May 8, 2023, Cordoba announced that Cordoba and JCHX had satisfied all necessary conditions to close the $100 million strategic arrangement for the joint development of the Alacran Project in Colombia. As a result of the closing, JCHX has funded the initial installment of $40 million towards its 50 % ownership interest in CMH, which owns 100 % of the Alacran Project and is the joint venture vehicle for Cordoba and JCHX in this strategic project level partnership.
For its 50 % interest, JCHX will pay the $100 million purchase price in three installments. The first payment of $40 million was made by JCHX at closing. A second installment of $40 million is payable in cash upon the board of
13
IVANHOE ELECTRIC INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Unaudited - Tabular amounts expressed in thousands of U.S. dollars, unless otherwise indicated)
directors of Cordoba approving the Feasibility Study of the Alacran Project, and the filing of the Environmental Impact Assessment (“EIA”) to the relevant Colombian Government authority, but in no event shall such second installment be paid later than the second anniversary of the closing of the transaction. A third and final installment of $20 million is payable in cash once the approval of the EIA is obtained, which must be within two years of the transaction’s closing date. Should the EIA not be approved by the second anniversary of the closing date, JCHX will have the option to elect not to complete this final installment, which will result in JCHX being diluted to 40 % and Cordoba increasing to a majority 60 % shareholding in CMH.
In December 2022, JCHX advanced a bridge loan of $10 million to Cordoba. Upon closing of the transaction, the entire balance owing under the bridge loan and accrued interest was applied towards the first installment as a payment in kind.
(b) On May 10, 2023, Ivanhoe Electric signed a binding purchase and sale agreement (“PSA”) for the acquisition of surface land at its Santa Cruz Project in Arizona. The acquisition totals 6,205 acres of surface title and associated water rights.
Under the terms of the PSA, Ivanhoe Electric will acquire the land for a total purchase price of $120.5 million to be paid in installments, as follows:
•$5.0 million deposit, paid May 11, 2023, becomes non-refundable upon successful completion of due diligence;
•$34.3 million payable at the time of closing, expected in May 2023, inclusive of the $5.0 million deposit;
•$34.3 million, plus accrued interest, payable on or before six months following the date of closing;
•Four equal principal payments of $13.0 million on the first, second, third and fourth anniversaries of the Second Closing Payment, plus applicable accrued interest.
Interest on future payments will accrue at a rate of Prime plus 1 %.
(c) On May 15, 2023, Ivanhoe Electric signed a definitive agreement with Saudi Arabian Mining Company Ma’aden (“Ma’aden”) which finalized the terms of the transactions previously announced on January 11, 2023. The transactions include the establishment of a 50/50 exploration joint venture between Ma’aden and Ivanhoe Electric to explore approximately 48,500 km2 of prospective land in Saudi Arabia and a $126.5 million strategic investment by Ma'aden in Ivanhoe Electric common stock.
The Company expects to issue approximately 10.2 million common shares to Ma’aden, representing 9.9 % of common shares outstanding, at a purchase price of $12.38 per share. Of the $126.5 million total proceeds from the private placement, $66 million will go to the joint venture to fund exploration activities, including the purchase of three new TyphoonTM machines. The remaining $60 million will be retained by Ivanhoe Electric to advance our portfolio of US mineral projects, and for working capital and general corporate purposes.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with the condensed interim consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q (this “Quarterly Report”) and with our audited consolidated and combined carve-out financial statements and the related notes for the fiscal year ended December 31, 2022 included in Part II of our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (the “SEC”) on March 14, 2023 (the “2022 Form 10-K”).
Special Note Regarding Forward-Looking Statements
This Quarterly Report contains 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"), that involve risks and uncertainties, including statements based on our current expectations, assumptions, estimates and projections about future events, our business, financial condition, results of operations and prospects, our industry and the regulatory environment in which we operate. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. Those statements include, but are not limited to, statements with respect to: estimated calculations of mineral reserves and resources at our properties including changes in those estimated calculations, anticipated results of exploration activities, plans and objectives, industry trends, our requirements for additional capital, treatment under applicable government regimes for permitting or attaining approvals, government regulation, environmental risks, title disputes or claims, synergies of potential future acquisitions, and our anticipated uses of the net proceeds from our initial public offering. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “could,” “should,” “would,” “achieve,” “budget,” “scheduled,” “forecasts,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our industry. All forward-looking statements speak only as of the date on which they are made. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions concerning future events that are difficult to predict. Therefore, actual future events or results may differ materially from these statements. We believe that the factors that could cause our actual results to differ materially from those expressed or implied by forward-looking statements include the following: our mineral projects are all at the exploration stage; we have no mineral reserves, other than at the San Matias project; we have a limited operating history on which to base an evaluation of our business and prospects; we depend on our material projects for our future operations; our mineral resource calculations at the Santa Cruz Project are only estimates; actual capital costs, operating costs, production and economic returns may differ significantly from those we have anticipated; the title to some of the mineral properties may be uncertain or defective; our business is subject to changes in the prices of copper, gold, silver, nickel, cobalt, vanadium and platinum group metals; we have claims and legal proceedings against two of our subsidiaries; our business is subject to significant risk and hazards associated with future mining operations; we may fail to identify attractive acquisition candidates or joint ventures with strategic partners or be unable to successfully integrate acquired mineral properties or successfully manage joint ventures; our business is extensively regulated by the United States and foreign governments as well as local governments; the requirements that we obtain, maintain and renew environmental, construction and mining permits are often a costly and time-consuming process; our non-U.S. operations are subject to additional political, economic and other uncertainties not generally associated with domestic operations; and our operations may be impacted by the COVID-19 pandemic, including impacts to the availability of our workforce, government orders that may require temporary suspension of operations, and the global economy.
You should carefully consider these risks, as well as the additional risks described in other documents we file with the SEC. We also operate in a very competitive and rapidly changing environment. New risks emerge from time to time and it is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in, or implied by, any forward-looking statements.
These factors should not be construed as exhaustive and should be read in conjunction with the risks described under the heading “Risk Factors” in our 2022 Form 10-K. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under “Risk Factors” in the 2022 Form 10-K. These risks and uncertainties, as well as other risks of which we are not aware or which we currently do not believe to be material, may cause our actual future results to be materially different than those expressed in our forward-looking statements. We caution you not to place undue reliance on these forward-looking statements. We do not undertake any obligation to make any revisions to these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as required by law.
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Business Overview
We are a United States domiciled minerals exploration and development company with a focus on developing mines from mineral deposits principally located in the United States in order to support domestic supply chain independence and to deliver the critical metals necessary for electrification of the economy. We believe the United States is significantly underexplored and will yield major new discoveries of these metals. Our mineral exploration efforts focus on copper, nickel, vanadium, cobalt, platinum group elements, gold and silver. All of our mineral properties are in the exploration stage.
“Our” mineral projects refers to our interests in such projects which may be a direct ownership interest in mineral titles (including through subsidiary entities), a right to acquire mineral titles through an earn-in or option agreement, or, in the case of our investments in publicly listed companies in Canada, through our ownership of the equity of those companies, that have an interest in such mineral projects.
Our two material mineral projects are the Santa Cruz Copper Project (“Santa Cruz” or the “Santa Cruz Project”) in Arizona and the Tintic Copper-Gold Project (“Tintic” or the “Tintic Project”) in Utah. We have the option to acquire 100% of the mineral rights constituting the Santa Cruz and Tintic projects. On May 11, 2023, we announced the signing of a binding purchase and sale agreement for the acquisition of 6,205 acres of surface title and associated water rights at the Santa Cruz Project for a total purchase price of $120.5 million to be paid in installments over a 4.5-year period. We also hold the option to acquire all the mineral titles contiguous with the acquired surface lands. Those mineral rights will be formally acquired upon the completion of scheduled option payments in August 2023 and 2024. At that time, we will have a unified land and mineral package encompassing the entire Santa Cruz Project.
Our other key mineral projects include the Hog Heaven Project, located in Montana (the “Hog Heaven Project”), and the Ivory Coast Project located in the Ivory Coast, West Africa, which is held through our 22.8% equity interest in Sama Resources Inc. (“Sama”) and our 30% direct interest in the Sama Nickel Corporation Inc. joint venture.
We also have investments in publicly traded companies in Canada, and through our ownership of equity in those companies, we have an indirect interest in mineral projects in the United States, Canada, Colombia and Peru.
In addition to our mineral projects, we also own controlling interests in two technology companies: VRB and CGI. As of March 31, 2023, we owned 90.0% of the outstanding shares of VRB. VRB and its subsidiary companies are primarily engaged in the design, manufacture, installation, and operation of energy storage systems. As of March 31, 2023, we owned 94.3% of CGI’s outstanding shares. CGI has developed technology that consists of sophisticated codes to process geophysical data and build 3D subsurface images that could indicate the presence of various natural resources, including metallic minerals and water. CGI offers mineral prospectivity and drill target identification services, data analytic tools and optimization of operational processes. CGI provides fee-for-service and licensing agreements for one-off technology applications to customers in the area of critical minerals, energy and water exploration.
On May 15, 2023, we signed a definitive agreement with Saudi Arabian Mining Company Ma’aden (“Ma’aden”) which finalized the terms of the transactions previously announced on January 11, 2023. The transactions include the establishment of a 50/50 exploration joint venture between Ma’aden and Ivanhoe Electric to explore approximately 48,500 km2 of prospective land in Saudi Arabia, and a $126.5 million strategic investment by Ma'aden in Ivanhoe Electric common stock. We expect to issue approximately 10.2 million common shares to Ma’aden, representing 9.9% of common shares outstanding, at a purchase price of $12.38 per share. Of the $126.5 million total proceeds from the private placement, $66 million will go to the joint venture to fund exploration activities, including the purchase of three new-generation TyphoonTM machines. The remaining $60 million will be retained by Ivanhoe Electric to advance our portfolio of US mineral projects, and for working capital and general corporate purposes. The transactions are expected to close by the end of June 2023 subject to the approval of a supplemental listing application by the New York Stock Exchange and the corporate and regulatory formalities required in Saudi Arabia to incorporate the joint venture entity.
On June 30, 2022, we completed an initial public offering and the Company’s shares were listed on the NYSE American and the TSX under the ticker symbol “IE”.
Reverse Stock Split
On June 16, 2022, we effected a reverse stock split of our outstanding common stock at a ratio of 3-for-1 (the “Reverse Stock Split”). The number of authorized shares and the par value of the common stock were not adjusted as a result of the Reverse Stock Split. All references to common stock, options to purchase common stock, per share data and related information have been retrospectively adjusted to reflect the effect of the Reverse Stock Split for all periods presented.
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Impact of the COVID-19 Pandemic
The COVID-19 global pandemic has caused governments worldwide to implement measures to slow the spread of the outbreak through quarantines, travel restrictions, business shutdowns, and other measures. The COVID-19 pandemic has negatively affected the global economy, disrupted financial markets and international trade, resulted in increased unemployment levels and significantly affected global supply chains, all of which have and are expected to continue to affect our future exploration activities and business. To the extent the COVID-19 pandemic adversely affects our business prospects, financial condition, and results of operation, it may also have the effect of exacerbating many of the other risks described in the Item 1A. Risk Factors section in our 2022 Form 10-K.
Segments
We account for our business in three business segments – (i) critical metals, (ii) data processing and software licensing services and (iii) energy storage systems.
Significant Components of Results of Operations
Revenue, Cost of Sales and Gross Profit
We generate revenue from our technology businesses CGI and VRB, which are included in the data processing and software licensing business segment and the energy storage systems business segment, respectively.
We have not generated any revenue from our mining projects because they are in the exploration stage. We do not expect to generate any revenue from our mining projects for the foreseeable future.
Exploration Expenses
Exploration expenses include topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling and activities in relation to identifying a mineral resource and then evaluating the technical feasibility and commercial viability of extracting the mineral resource, as well as value-added taxes in relation to these direct exploration and evaluation costs incurred in foreign jurisdictions where recoverability of those taxes is uncertain. Exploration expenses also include salaries, benefits and stock-based compensation expenses of the employees performing these activities.
Exploration expenses also include payments under earn-in and option agreements where the option right is with respect to ownership interests in legal entities owning the underlying mineral project in the exploration project phase. Through our earn-in and option agreements, we have the right (and in some cases, the obligation) to fund and conduct exploration on the underlying mineral project prior to determining whether to acquire a minority or majority ownership interest through further funding the costs of such exploration and, in some cases, through direct payments to the owners of the project. In the event we cease making expenditures on an exploration mineral project or fail to incur the agreed level of exploration expenditures, we will not obtain an ownership right beyond any which may have been acquired as of the date of termination.
Included in exploration expenses are exploration costs that we incur in relation to generating new projects. These activities may or may not proceed to earn-in agreements depending on our evaluation. These are categorized as “Generative exploration and other”.
General and Administrative Expenses
Our general and administrative expenses consist of salaries and benefits, stock-based compensation, professional and consultant fees, insurance and other general administration costs. Our general and administrative expenses have increased significantly now that we are operating as a public company and have added to our management team. In particular, we expect to incur increased general and administrative expenses costs in 2023 compared to 2022 for salaries, non-cash stock-based compensation, compliance related costs and directors’ and officers’ insurance expense.
Research and Development Expenses
Expenditures on research and development activities are recognized as an expense in the period in which they are incurred. We expect research and development expenses to increase as our technology-based businesses continue to grow.
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Since 2018, the majority of our research and development expenses came from CGI’s data processing business, which includes amortization expenses related to its artificial intelligence intellectual property acquired in 2018. VRB also conducts research and development activities to continue to advance its energy storage system technology.
We also have research and development expenses that we incur in relation to TyphoonTM. In 2023, we have commenced design and development activities for our next generation of TyphoonTM equipment.
Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022
For the three months ended March 31, 2023 we recorded a net loss attributable to common stockholders of $36.1 million ($0.39 per share), compared to $15.5 million ($0.24 per share) for the three months ended March 31, 2022, which was an increase of $20.6 million. Significant contributors to this increase for the three months ended March 31, 2023 included an increase of $9.2 million in exploration expenditures, an increase of $5.4 million in general and administrative expenses, and a decrease of $6.1 million in revenue compared to the three months ended March 31, 2022.
Exploration expenses were $26.6 million for the three months ended March 31, 2023, an increase of $9.2 million from $17.3 million for the three months ended March 31, 2022. Exploration expenses consisted of the following:
| Three months ended March 31, | ||||||||||||||
| (In thousands) | 2023 | 2022 | ||||||||||||
| Exploration Expenses: | ||||||||||||||
| Santa Cruz, USA | $ | 14,682 | $ | 9,798 | ||||||||||
| San Matias, Colombia | 4,658 | 2,376 | ||||||||||||
| Tintic, USA | 1,121 | 289 | ||||||||||||
| Hog Heaven, USA | 638 | 560 | ||||||||||||
| White Hill, USA | 491 | — | ||||||||||||
| Lincoln, USA | 295 | 13 | ||||||||||||
| Carolina, USA | 238 | — | ||||||||||||
| Pinaya, Peru | 157 | 686 | ||||||||||||
| Generative exploration and other | 4,279 | 3,601 | ||||||||||||
| Total | $ | 26,559 | $ | 17,323 | ||||||||||
During the three months ended March 31, 2023, exploration expenditures largely focused on activities at:
•the Santa Cruz Project where $14.7 million of exploration expenditure was incurred in the three months ended March 31, 2023 compared to $9.8 million incurred in the three months ended March 31, 2022. Activities during the three months ended March 31, 2023 at Santa Cruz were focused on a program of exploration and infill resource, geotechnical, hydrological and metallurgical drilling, advancing technical studies, completing an updated mineral resource estimate and beginning an Initial Assessment Study for the Santa Cruz Copper Project.
•the San Matias Project where $4.7 million of exploration expenditure was incurred by Cordoba Minerals for the three months ended March 31, 2023 focused on continuing work on the feasibility study on the Alacran deposit. Activities during the three months ended March 31, 2023 included ongoing infill geotechnical, metallurgical, hydrological and infill resource drilling to advance the feasibility study. During the three months ended March 31, 2023 a total of 3,946 meters of infill diamond drilling was completed. To date, a total of approximately 40,000 meters out of the planned 42,000 meter infill diamond drilling campaign have been completed; and
•the Tintic Project where $1.1 million of exploration expenditure was incurred in the three months ended March 31, 2023 compared to $0.3 million incurred in the three months ended March 31, 2022. Activities during the three months ended March 31, 2023 at Tintic were focused on completing an initial diamond drill hole which we commenced drilling in November 2022 and completed in February 2023 in challenging snowy conditions. We expect to execute a more extensive drilling campaign at Tintic during the spring of 2023 when operating conditions improve; and
General and administrative expenses were $10.6 million for the three months ended March 31, 2023, an increase of $5.4 million from $5.2 million in three months ended March 31, 2022. Several items contributed to the increase, including:
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•a $3.8 million increase in stock-based compensation expense largely due to impact of the additional non-cash stock-based compensation expense of the additional Ivanhoe Electric stock option and RSU grants that occurred in November 2022 and during the three months ended March 31, 2023; and
•a $1.6 million increase in directors and officers insurance expenses for the three months ended March 31, 2023 in relation to the new director and officers insurance policy we entered into when we became a public company in June 2022. There was no similar expense in the three months ended March 31, 2022.
CGI’s software licensing and data processing services to the mining and oil and gas industries represented 100.0% of our revenue for the three months ended March 31, 2023 ($0.7 million) and 100.0% for the three months ended March 31, 2022 ($6.8 million). VRB generated no revenue during these periods.
| Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Percentage Change | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Software licensing and data processing services: | |||||||||||||||||
| Revenue | $ | 679 | $ | 6,762 | (90) | % | |||||||||||
| Cost of sales | (184) | (52) | 254 | % | |||||||||||||
| Gross profit | $ | 495 | $ | 6,710 | (93) | % | |||||||||||
CGI’s revenue for the three months ended March 31, 2023 was $0.7 million a decrease of $6.1 million from $6.8 million for the three months ended March 31, 2022. The decrease in CGI’s revenue was a result of revenue for the three months ended March 31, 2022 including a one-time amount of $6.5 million relating to a new contract that CGI entered into with one of its customers upon the expiration of a previous three-year contract. Under that agreement with this customer, CGI agreed to license certain software for a one-time fee of $6.5 million, which was received and recognized in the first quarter of 2022. CGI’s revenue for the three months ended March 31, 2023 consisted of $0.4 million of software licensing revenue and $0.3 million in revenue from processing data.
CGI’s gross profit for the three months ended March 31, 2023 was $0.5 million, a decrease of $6.2 million from $6.7 for the three months ended March 31, 2022. The licensing of certain software for a one-time fee of $6.5 million had a direct impact on gross profit for the three months ended March 31, 2022 as the licenses had no underlying carrying value and therefore resulted in a $6.5 million gross profit being recognized.
Research and development expenses for the three months ended March 31, 2023 were $1.8 million, an increase of $0.5 million from the same period in 2022 primarily attributable to incurring $0.6 million of expenditure in the first quarter of 2023 on commencing research and development activities for our next generation of TyphoonTM equipment.
Stock-Based Compensation
During the three months ended March 31, 2023, we granted stock options to certain new employees of the Company. In February 2023, we granted 500,000 stock options at an exercise price of $13.23 per share and in March 2023, we granted 100,000 stock options at an exercise price of $15.46. The fair value of the option grants was determined using the Black-Scholes option-pricing model as $7.22 and $8.53 per share, respectively. In addition, in January 2023, we granted 750,000 RSUs to a new senior officer of the Company which had a fair value on the grant date of $12.15 per share.
Liquidity, Capital Resources and Capital Requirements
Cash Resources
We have recurring net losses and negative operating cash flows and we expect that we will continue to operate at a loss for the foreseeable future.
We generate revenue from our technology businesses. We have not generated any revenue from our mining projects and do not expect to generate any revenue from our mining projects for the foreseeable future.
We have funded our operations primarily through the sale of our equity and convertible securities.
At March 31, 2023 and December 31, 2022, we had cash and cash equivalents of $107.0 million and $139.7 million, respectively, and a working capital of $100.8 million and $133.6 million, respectively. Of the total cash and cash
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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 these amounts were held by non-wholly-owned subsidiaries.
We believe that we will have sufficient cash resources to carry out our business plans for at least the next 12 months. We have based these estimates on our current assumptions which may require future adjustments based on our ongoing business decisions as well as, in particular, exploration success at our mineral projects. Accordingly, we may require additional cash resources earlier than we currently expect or we may need to curtail currently planned activities.
Our significant operational expenses include the payments that we anticipate making under the various earn-in and option agreements to which we are a party. These agreements are structured to provide us with flexibility whereby our ability to continue to explore on a mineral project is contingent on funding agreed specified levels over specified time intervals.
Cash Balances as of March 31, 2023
The table below discloses the amounts of cash disaggregated by currency denomination as of March 31, 2023 in each jurisdiction that our affiliated entities are domiciled.
| Currency by Denomination (in USD Equivalents) | |||||||||||||||||||||||||||||||||||
| US dollars | Canadian dollars | Chinese Renminbi | Colombian Pesos | Other | Total | ||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||
| Jurisdiction of Entity: | |||||||||||||||||||||||||||||||||||
| USA | $ | 95,456 | $ | 776 | $ | — | $ | — | $ | — | $ | 96,232 | |||||||||||||||||||||||
| Colombia | — | — | — | 123 | — | $ | 123 | ||||||||||||||||||||||||||||
| Cayman Islands | 5,843 | 4 | — | — | — | $ | 5,847 | ||||||||||||||||||||||||||||
| Canada | 3,041 | 917 | — | — | — | $ | 3,958 | ||||||||||||||||||||||||||||
| China | — | — | 336 | — | — | $ | 336 | ||||||||||||||||||||||||||||
| British Virgin Islands | 422 | 1 | — | — | — | $ | 423 | ||||||||||||||||||||||||||||
| Other | 42 | 1 | — | — | 33 | 76 | |||||||||||||||||||||||||||||
| Total | $ | 104,804 | $ | 1,699 | $ | 336 | $ | 123 | $ | 33 | $ | 106,995 | |||||||||||||||||||||||
Our subsidiary VRB, domiciled in the Cayman Islands, is subject to certain foreign exchange restrictions with respect to its People's Republic of China ("PRC") subsidiaries. There are foreign exchange policies in the PRC that limit the amount of capital that can be directly transmitted offshore from VRB’s PRC subsidiaries to VRB. Since their incorporation, these PRC subsidiaries have had accumulated losses and have not declared or paid any dividends or made any distribution of earnings.
There were no cash transfers to or from our PRC subsidiaries in the form of intercompany loans during the three months ended March 31, 2023.
Refer to Note 18 of our consolidated and combined carve-out financial statements in our 2022 Form 10-K which outlines other restrictions on transfers of net assets from our consolidated subsidiaries to the Company.
Convertible Bond — VRB.
In 2021, VRB issued a convertible bond for gross proceeds of $24.0 million. The bond has a five-year term and interest accrues at a rate of 8% per annum. Prior to the maturity date, the convertible bond will be automatically converted into equity of VRB upon an equity financing or sale event, at a price per share equal to the lower of (A) the transaction price of the equity financing or sale event, and (B) the valuation cap price of $158.0 million divided by the total shares outstanding at the time of the event. If no equity financing or sale event occurs, VRB must repay the outstanding principal and interest on maturity.
Bridge Loan — Cordoba Minerals.
In December 2022, JCHX advanced a bridge loan of $10 million to Cordoba Minerals in connection with the strategic arrangement for the joint development of Cordoba Mineral’s Alacran Project. The bridge loan is for an 18-month term and bears interest at 12% per annum during the first 12 months of the term and 14% per annum during the remaining six months, calculated on the basis of a 365-day year. Upon closing the strategic arrangement on May 8, 2023, all of the principal and interest outstanding on the bridge loan was applied towards the first installment as a payment in kind.
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Cash Flows
The following table presents our sources and uses of cash for the periods indicated:
| Three Months Ended March 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Net cash (used in) provided by: | |||||||||||
| Operating activities | (30,019) | (14,619) | |||||||||
| Investing activities | (2,666) | (5,600) | |||||||||
| Financing activities | 3 | — | |||||||||
| Effect of foreign exchange on cash | 17 | 138 | |||||||||
| Total change in cash | (32,665) | (20,081) | |||||||||
Operating activities.
Net cash used in operating activities for all periods presented largely was spent on our exploration expenses and our general and administrative costs. We do not generate adequate cash from operations to cover our operating expenses and therefore rely on our financing activities to provide the cash resources to fund our operating and investing activities.
Net cash used in operating activities for the three months ended March 31, 2023 was $30.0 million, an increase of $15.4 million from the $14.6 million of net cash used for the three months ended March 31, 2022.
Investing activities.
Our investing activities generally relate to acquisitions of mineral property interests, purchases of public company shares in companies that we may partner with and capital expenditures at our projects. To date, due to our mining projects being in the exploration stage we have not incurred material capital expenditures.
Net cash used in investing activities for the three months ended March 31, 2023 of $2.7 million was mainly attributable to $1.8 million related to payments for mineral interests and $0.6 million for the purchase of investments that are subject significant influence. The $1.8 million of cash used for purchases of mineral interests related to option payments at our Tintic Project. The $0.6 million for the purchase of investments that are subject to significant influence relates to the funding of our 30% interest in the Sama Nickel Corporation Inc. joint venture in the Ivory Coast.
Financing activities.
During the three months ended March 31, 2023, there were no significant financing activities as we continued to fund our operations with proceeds from our IPO.
Contractual Obligations
As of March 31, 2023, there have been no material changes, outside the ordinary course of business, in our contractual obligations since December 31, 2022. Refer to Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 14, 2023, for information regarding our contractual obligations.
Off Balance Sheet Arrangements
As of March 31, 2023, we were not involved in any off-balance sheet arrangements that have or are reasonably likely to have a material effect on our financial condition, results of operations, or liquidity.
Related Party Transactions
See Note 11 of our consolidated and combined carve-out financial statements for the three months ended March 31, 2023.
Critical Accounting Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated and combined carve-out financial statements which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of
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assets, liabilities, revenues and expenses, as well as the disclosure of contingent assets and liabilities as of the date of our financial statements.
Below are the accounting matters that we believe are critical to our financial statements due to the degree of uncertainty regarding the estimates or assumptions involved and the magnitude of the asset, liability, revenue, expense, gain or loss being reported. Actual results may vary from our estimates in amounts that may be material to the financial statements. An accounting estimate is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our financial statements.
We base our assumptions and estimates on historical experience and various other sources that we believe to be reasonable under the circumstances. Actual results may differ from the estimates we calculate due to changes in circumstances, global economics and politics and general business conditions. A summary of our significant accounting policies are detailed in Note 3 to our consolidated and combined carve-out financial statements included in our 2022 Form 10-K. We have outlined below those policies identified as being critical to the understanding of our business and results of operations and that require the application of significant management judgment in developing estimates.
Recoverable value of exploration mineral interests
We review and evaluate exploration mineral interests for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability of our exploration mineral interests and intangible assets did not involve significant estimation in the periods presented as circumstances did not indicate the carrying amount of our assets may not be recoverable. However, the recoverability of our recorded mineral interests is subject to market factors that could significantly affect the recoverability of our assets, such as commodity prices, results of exploration activities that may affect our intentions to continue under option or earn-in agreements and geopolitical circumstances, particularly in Colombia. By nature, significant changes in these factors are reasonably possible to occur periodically, which could materially impact our financial statements.
Stock-based compensation
Compensation expense for options granted to employees, directors and certain service providers is determined based on estimated fair values of the options at the time of grant using the Black-Scholes option pricing model, which takes into account, as of the grant date, the fair market value of the shares, expected volatility, expected life, expected dividend yield and the risk-free interest rate over the expected life of the option. The use of the Black-Scholes option pricing model requires input estimation of the expected life of the option and volatility, which can have a significant impact on the valuation model and resulting expense recorded.
In February 2023, we granted 500,000 stock options at an exercise price of $13.23 per share and in March 2023, we granted 100,000 stock options at an exercise price of $15.46. The fair value of the option grants was determined using the Black-Scholes option-pricing model as $7.22 and $8.53 per share, respectively. The following assumptions were used to compute the fair value of the options granted:
| February 1, 2023 Grant Date | March 1, 2023 Grant Date | |||||||
| Risk-free interest rate | 3.7% | 4.5% | ||||||
| Dividend yield | nil | nil | ||||||
| Estimated volatility | 69.8% | 69.5% | ||||||
| Expected option life | 4 years | 4 years | ||||||
The risk-free interest rate assumption was based on the U.S. treasury constant maturity yield at the date of the grant over the expected life of the option. No dividends are expected to be paid. We calculated the estimated volatility based on the historical volatility of a group of peer companies’ common stock and a group of relevant stock market indices over the expected option life as we only commenced publicly trading in June 2022. The computation of expected option life was determined based on a reasonable expectation of the option life prior to the option being exercised or forfeited.
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Income taxes
We make estimates and judgments in determining the provision for income tax expense, deferred tax assets and liabilities and liabilities for unrecognized tax benefits, including interest and penalties. We are subject to income tax laws in many jurisdictions, including the United States, Canada, Colombia, Peru, Australia, the Ivory Coast and the PRC.
We report income tax in accordance with U.S. GAAP, which requires the establishment of deferred tax accounts for all temporary differences between the financial reporting and tax bases of assets and liabilities, using currently enacted tax rates. In addition, deferred tax accounts must be adjusted to reflect new rates if enacted into law.
Realization of deferred tax assets is contingent on the generation of future taxable income. As a result, we consider whether it is more likely than not that all or a portion of such assets will be realized during periods when they are available, and if not, we provide a valuation allowance for amounts not likely to be recognized. In determining our valuation allowance, we have not assumed future taxable income from sources other than the reversal of existing temporary differences. The extent to which a valuation allowance is warranted may vary as a result of changes in our estimates of future taxable income. In addition to the potential generation of future taxable income through the establishment of economic feasibility, development and operation of mines on our exploration assets, estimates of future taxable income could change in the event of disposal of assets, the identification of tax-planning strategies or changes in tax laws that would allow the benefits of future deductible temporary differences in certain entities or jurisdictions to be offset against future taxable temporary differences in other entities or jurisdictions.
We recognize the effect of uncertain income tax positions if those positions are more likely than not of being sustained. The amount recognized is subject to estimates and our judgment with respect to the likely outcome of each uncertain tax position. The amount that is ultimately incurred for an individual uncertain tax position or for all uncertain tax positions in the aggregate could differ from the amount recognized. We had no uncertain tax positions as of March 31, 2023.
Emerging Growth Company Status
We are an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012 (the (“JOBS Act"). The JOBS Act exempts emerging growth companies from being required to comply with new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated and combined carve-out financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
The accounting policies applied in our consolidated and combined carve-out financial statements included elsewhere in this Quarterly Report reflect the early adoption of certain accounting standards as the JOBS Act does not preclude an emerging growth company from early adopting a new or revised accounting standard to the extent early adoption is allowed by the accounting standard.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not Applicable.
Item 4. Controls and Procedures.
Management’s Evaluation of our Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.
As of March 31, 2023, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily
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applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our principal executive officer and principal financial officer have concluded based upon the evaluation described above that, as of March 31, 2023, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
During the quarter ended March 31, 2023, there were no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may become subject to various legal proceedings that are incidental to the ordinary conduct of our business. Although we cannot accurately predict the amount of any liability that may ultimately arise with respect to any of these matters, we make a provision for potential liabilities when we deem them probable and reasonably estimable. These provisions are based on current information and legal advice and may be adjusted from time to time according to developments. We believe that none of the litigation in which we are currently involved, or have been involved in since the beginning of our most recently completed fiscal year, individually or in the aggregate, is material to our financial condition, cash flows or results of operations.
Two of our subsidiaries are involved in legal proceedings described below.
Our subsidiary Kaizen was involved in litigation in British Columbia, Canada which commenced in 2017. The proceedings related to a claim by AM Gold Inc. (“AMG”) against Kaizen in respect of its acquisition of the Pinaya Project. On September 2, 2022, the Supreme Court of Canada dismissed the application of AM Gold (“AMG”) seeking leave to appeal the January 21, 2022 decision of the British Columbia Court of Appeal, which upheld the March 23, 2021 decision of the trial judge dismissing all of AMG’s claims. The British Columbia Court of Appeal concluded that no errors were made in the trial judge’s reasoning. The Supreme Court of Canada’s dismissal means that the decision of the British Columbia Court of Appeal is final and conclusive. There is no further avenue of appeal or review available to AMG as a result of the Supreme Court of Canada’s dismissal of the claims. Kaizen was entitled to payment from AMG on account of the costs of the litigation and has now reached a settlement agreement regarding that entitlement with AMG and recovered costs of Cdn$500,000 in March 2023.
Our subsidiary Cordoba is currently involved in two legal proceedings. The first is a criminal lawsuit filed by Cordoba in late 2018 and in January 2019 with the Colombian prosecutors against nine members of former Colombian management alleging breach of fiduciary obligations, abuse of trust, theft and fraud. This proceeding is ongoing. In the second proceeding, Cordoba (along with the National Mining Agency, Ministry of Mines and Energy, the local environmental authority, the Municipality of Puerto Libertador and the State of Cordoba) were served with a class action claim by the Alacran Community. This class action seeks (i) an injunction against Cordoba´s operations in the Alacrán area and (ii) an injunction against the prior declaration by the authorities that the Alacran Community´s mining activities were illegal. The claim was initially filed with the Administrative Court of Medellín, which remanded the case to the Administrative Court of Montería, which contested it and submitted the case to the Council of State. The Council of State determined the Administrative Court of Montería as the competent tribunal, where the process is currently being conducted. The Administrative Court of Montería admitted the commencement of the class action on September 2021. The decision was challenged by Cordoba and other defendants and confirmed by the Court. Cordoba timely filed its: (i) response to the lawsuit and statement of defense; and (ii) opposition to the injunction requested by plaintiffs. The Court now should: (i) issue a decision on the injunction; and (ii) schedule date and time for the initial hearing. While the court matters proceed, Cordoba will incur additional costs that will negatively impact its financial position. As well, the litigation process is uncertain and it is possible that the second proceeding is resolved against Cordoba, which could have a material adverse effect on its business, results of operations, financial condition and prospects.
Item 1A. Risk Factors.
There have been no material changes to our risk factors previously disclosed in Part I, Item 1A. “Risk Factors” of our 2022 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Unregistered Sales of Equity Securities for the Three Months Ended March 31, 2023
During the three months ended March 31, 2023, we have issued and sold the securities described below without registering the securities under the Securities Act.
On February 21, 2023 we entered into an earn-in agreement pursuant to which we agreed to issue up to $1,400,000 worth of our common stock to Exiro Minerals USA Corp. as partial consideration for the right to earn in on the White Hill Copper Project. The first tranche of 10,281 shares was issued on March 3, 2023 at a deemed price of $14.59 per share. Additional shares may be issued by the Company in connection with an earn-in right over the course of up to six years. Such shares will be valued at the greater of $11.75 per share or the 5-day volume-weighted average price of such shares for
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the five consecutive trading day period ending on the trading day prior to the applicable anniversary date of the agreement that requires the issuance.
The issuance of the above securities was exempt pursuant to Section 4(a)(2)of the Securities Act, as the securities were issued to financially sophisticated purchaser in a privately negotiated transaction.
Use of Proceeds from our IPO
On June 27, 2022, our Registration Statement on Form S-1 (File No. 333-265175) relating to our IPO of our common stock was declared effective by the SEC.
On June 30, 2022, we completed our IPO and issued and sold 14,388,000 shares of our common stock at a price to the public of $11.75 per share for aggregate gross proceeds of $169.1 million. BMO Capital Markets Corp. and Jefferies LLC acted as joint book-running managers for the IPO and as representatives of the underwriters.
The net proceeds from the IPO to us, after deducting underwriting discounts and commissions and offering expenses of $11.1 million, were $158.0 million. No IPO expenses were paid directly or indirectly to any of our directors or officers (or their associates) or persons owning 10.0% or more of any class of our equity securities or to any other affiliates. As at March 31, 2023, the Company's use of net proceeds is materially in-line with the planned use of net proceeds as described in the final prospectus.
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Item 6. Exhibits.
Exhibit Number | Description | ||||
| 10.1* | |||||
| 10.2* | |||||
| 10.3 | |||||
| 31.1* | |||||
| 31.2* | |||||
| 32.1* | |||||
| 32.2* | |||||
| 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) | ||||
*Filed herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: May 15, 2023 | By: | /s/ Taylor Melvin | ||||||
| Taylor Melvin | ||||||||
| Chief Executive Officer | ||||||||
| (Principal Executive Officer) | ||||||||
Date: May 15, 2023 | By: | /s/ Jordan Neeser | ||||||
| Jordan Neeser | ||||||||
| Chief Financial Officer | ||||||||
| (Principal Financial Officer) | ||||||||
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Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 24th day of JANUARY 2022.
BETWEEN:
IVANHOE ELECTRIC INC., having an office at Suite 606-999 Canada Place, Vancouver, British Columbia,
Canada, V6C 3E1
(the "Company")
AND:
GLEN KUNTZ, residing at _____________________________________________________
(the "Employee")
WHEREAS:
(A)Ivanhoe Electric Inc. is a technology led Exploration Company with corporate offices located in Vancouver, British Columbia, Canada. Through subsidiaries and investment, the Company funds and manages exploration programs in several jurisdictions globally;
(B)the Company wishes to engage the Employee as Chief Technical and Innovation Officer of the Company (the “Position”);
(C)the Employee’s payroll and benefit plans and other related employee costs will be administered by Global Mining Management Corporation (“Global”) and all related costs will be paid by the Company in accordance with the Global Mining Management Corporation Shareholders’ Corporate Management and Cost Sharing Agreement dated December 4, 2013 as amended January 1, 2016; and
(D)the parties hereto wish to enter into this Agreement for the purpose of fixing the compensation and terms applicable to the employment of the Employee during the period hereinafter set out.
NOW THEREFORE THIS AGREEMENT WITNESSES that the parties hereto, in consideration of the respective covenants and agreements on the part of each of them herein contained do hereby covenant and agree as follows:
Section 1 Employment
1.1The Company hereby engages the Employee, and the Employee acknowledges and agrees, to perform the function of Chief Technical and Innovation Officer for the Company based in Thunder Bay, Ontario, Canada, reporting to Eric Finlayson, President of the Company and, in fulfilment of the Position, will carry out such duties and responsibilities as are customarily performed by persons in such role within the industry.
1.2The Employee may be expected to travel outside of Canada to the Company's offices and project sites as required.
Section 2 Term
This Agreement will be effective from the date hereof and will remain in full force and effect until terminated as hereinafter provided.
Section 3 Responsibility
Subject to the approval and/or ratification of the Board of Directors (the “Board”), the Employee will have the authority and duty to perform and carry out such duties and responsibilities as are customarily carried out by persons holding similar positions in other companies comparable in size to the Company and such additional and related duties as may from time to time be assigned, delegated, limited or determined by the Board.
Section 4 Other Activities
4.1The Employee's employment hereunder shall be full-time and exclusively for the benefit of the Company. By accepting employment hereunder with the Company, the Employee agrees not to undertake, or be engaged in the performance of, any work, services or other business activity, directly or indirectly, for any other person, firm, company, other legal entity or governmental agency or organization, with the exception of the Employee’s directorship, officership or employment with the Company, unless such activities will not interfere with, or impede, in any significant manner the performance of his or her duties in the Position, and provided that:
(a)before the Employee can engage in any work, services or other business activity which involves the Employee owning or acquiring any interest, directly or indirectly, in any mining or technology property or the rendering of any advice or service to another person, partnership or other legal entity or a joint venture engaged in the business of exploring for and/or mining minerals, the Employee must disclose full particulars thereof in writing to the Board and within 15 days after the date of such disclosure, the Employee must receive from the Board a decision that such activities by the Employee will not, in the opinion of the Board, interfere or be in conflict with the Employee's performance of his or her duties to the Company hereunder, and
(b)before engaging in any work, services or business activity other than the kind described in sub- paragraph (a) of this Section 4, the Employee shall have disclosed same in writing to the Board.
4.2The Employee shall refer to the Board any and all facts, matters and transactions that may affect the Employee's relationship with the Company or the Employee’s ability to perform their duties, or in respect of which an actual or potential conflict of interest between the Employee and the Company has arisen or may arise, however remote the possibility, and the Employee shall not proceed with any such matter or transaction until the Board’s approval therefor is obtained. For purposes of clarification, this provision is not intended to limit in any way the Employee's other fiduciary obligations to the Company that may arise in law or in equity.
4.3Without limiting the generality of the foregoing, the Employee acknowledges, covenants and agrees that under no circumstances will his or her provision of services in the Position involve or include, nor will the Employee be asked by any officer of the Company to engage in, any activities contrary to the Corruption of Foreign Public Officials Act (Canada) or the United States Foreign Corrupt Practices Act and any other similar legislation in the jurisdiction in which the Employee is employed.
4.4The Employee shall adhere to the Company's policies in effect from time to time.
Section 5 Compensation
5.1In consideration of the performance by the Employee of his or her responsibilities and duties in the Position hereunder:
(a)The Company shall pay the Employee the sum of C$275,000.00 (the "Base Salary") per year. The Base Salary and all other forms of compensation payable hereunder are subject to deduction for all applicable taxes, payroll deductions and withholdings required by law and otherwise in accordance with the payroll practices of the Company for similarly situated employees of the Company. All payments by the Company on account rendered by the Employee shall be made to a bank account designated by the Employee; provided that, the Company may decline to make payments to the Employee at the place so designated, and may make payments by cheque, draft or money order instead, if the Company determines that such payment in such jurisdiction would violate the laws of the jurisdiction of the place of payment specified by the Employee or the laws of any other country or the Company determines that making such payment in such place would be prejudicial to the Company notwithstanding any indemnification given by the Employee to the Company;
(b)The Base Salary will be reviewed annually and, if increased, such increased amount shall be the Base Salary hereunder;
(c)The Company shall pay the Employee a one-time sign-on bonus in the amount of C$50,000.00 payable on the Employee’s first payroll;
(d)The Employee will be entitled to participate in the compensation plans of the Company in effect from time to time, subject to the terms of the applicable plans;
(e)The Employee will be eligible to receive short term and long term incentive awards, based on the terms and conditions of the Company's then effective securities-based incentive plans;
(f)The Employee will be entitled to participate in employee benefit plans (including health, medical, dental, and other insurance benefits) from time to time in effect for similarly situated employees of the Company, except to the extent such plans are duplicative of benefits otherwise provided to the Employee. The Employee's participation will be subject to the terms of the applicable plan documents and generally applicable policies of the Company; and
(g)The Company will reimburse the cost of professional subscriptions to any professional society or organization directly affiliated with the Employee's role in the Company, as determined by the Company at its discretion.
Section 6 Expenses
The Company will reimburse the Employee for all reasonable and documented expenses actually and necessarily incurred by the Employee in connection with the performance of his or her duties under this Agreement in accordance with the policies of the Company in effect from time to time. The Employee will furnish the Company with an itemized account of his or her expenses in such form or forms as may reasonably be required by the Company and at such times or intervals as may be required by the Company.
Section 7 Vacation
7.1The Employee will be entitled to a paid vacation of twenty-five (25) days within each 12-month period during the term of this Agreement, to be calculated from the date of commencement of employment set forth in Section 2 herein. This vacation must be taken at such times as shall have been approved by the Company and on dates that do not adversely compromise the Employee's performance of his or her duties under this Agreement.
7.2The Employee may carry forward a maximum of ten (10) days’ vacation from one entitlement year to the next with the prior approval of the Company. Any such vacation carried forward must be taken by 31 March in the subsequent entitlement year. Any unused vacation in excess of ten (10) days will be forfeit.
Section 8 Indemnity
The Company shall indemnify and save harmless the Employee from any and all claims, damages, losses or costs, including but not limited to, those relating to loss or damage to property, or injury to, or death of any person or persons arising from or out of the Employee's performance of his or her obligations under this Agreement.
Section 9 Consent to Use Personal Information
9.1The Employee acknowledges and agrees that the Company has the right to collect, use and disclose his or her personal information for purposes relating to his or her employment with the Company, including:
(a)ensuring that he or she is paid for his or her services to the Company;
(b)administering any benefits to which he or she is or may become entitled to, including bonuses, medical, dental, disability and life insurance benefits, and/or incentive securities. This shall include the disclosure of his or her personal information to any insurance company and/or broker or to any entity that manages or administers the Company’s benefits on behalf of the Company;
(c)compliance with any regulatory reporting and withholding requirements relating to his or her employment; and
(d)in the event of a sale or transfer of all or part of the shares or assets of the Company, disclosing to any potential acquiring organization the Employee’s personal information solely for the purposes of determining the value of the Company and its assets and liabilities and to evaluate the Employee’s position in the Company. If the Employee’s personal information is disclosed to any potential acquiring organization, the Company will require the potential acquiring organization to agree to protect the privacy of the Employee’s personal information in a manner that is consistent with any policy of the Company dealing with privacy that may be in effect from time to time and/or any applicable law that may be in effect from time to time.
9.2The Employee may withdraw his or her consent provided herein at any time. The Employee acknowledges that if he or she withdraws their consent, their entitlement to certain employment benefits provided by the Company may be negatively affected and in the event of a sale of business, the acquiring organization may not be in a position to offer continued employment due to a lack of personal information on the Employee.
Section 10 Termination
10.1This Agreement may be terminated as follows:
(a)Upon receipt by the Company of the Employee's resignation, in writing, which shall be provided three (3) months prior to the effective date of resignation;
(b)Forthwith on the death of the Employee. In these circumstances, the Employee (or his or her estate) will be entitled to receive as full and sole compensation in discharge of the Company's obligations to the Employee under this Agreement, all sums due and payable to the date of termination;
(c)By the Company at any time, and for any reason whatsoever upon notice of six (6) months or payment equal to six (6) months’ base salary. The payments provided for in this Section 10.1(c) shall be inclusive of the Employee's entitlement to notice and severance pay at common law or by statute. The Employee will also be entitled to the continuation of medical and dental benefits until the date of termination; or
(d)By the Company summarily and without notice, payment in lieu of notice, severance payments, benefits, damages or any sums whatsoever, for any act or omission which constitutes just and reasonable cause as determined under Common Law. In the event of the summary termination of the Agreement under this Section 10.1(d), the Employee shall only be entitled to such compensation as would otherwise be payable to the Employee hereunder up to and including such date of termination, as the case may be; and
(e)Notwithstanding the foregoing, the Employee's rights and entitlements with respect to any stock options and RSUs shall be in accordance with the relevant incentive plan(s) in effect from time to time.
10.2Notwithstanding Section 10.1(a) and (c), on or following the service of notice by either party for any reason to terminate this Agreement, the Company may at its sole and absolute discretion terminate the Employee’s employment at any time and with immediate effect by making the Employee a payment in lieu of the notice period (or, if applicable, the remainder of the notice period) equivalent to the Base Salary and benefits at the date of termination.
10.3If this Agreement is terminated by either party while the Employee is on site, regardless of the circumstances or the reason for termination, the Company will reimburse the Employee for his or her return flight home and any change fees that are incurred by the Employee, and will ensure that the Employee's benefits coverage continues until he or she has returned home.
Section 11 Directorships and Other Offices
11.1The Company may from time to time in its discretion require the Employee to be nominated and appointed as a director or other officer or manager of the Company or of any of its subsidiary companies, and the Employee agrees to comply with each such request.
11.2If the Employee is a director or other officer or manager of the Company or of any of its subsidiary companies, the Company is not obliged to ensure that the Employee remains a director or officer or manager and the removal of the Employee as a director or from that office or management position will not amount to a breach of this Agreement or constitute Good Reason.
11.3If the Employee is at any time not a director of the Company or of any of its subsidiary companies then the Employee shall not be entitled to and shall not hold himself or herself out as a director and the removal of the term "Director" from his or her job title will not constitute a breach by the Company of this Agreement.
11.4Upon the termination of the Employee's employment by the Company for any reason (unless the Company in writing requires the Employee not to do so) the Employee hereby agrees to resign from and vacate each and every office as director of the Company or of any of its subsidiary companies and every other position which he or she may hold in the Company or subsidiary company to which he or she may have been appointed, and for purposes hereof the Employee hereby irrevocably and unconditionally appoints any director or the company secretary of the Company as his or her agent or attorney to effect each such resignation.
11.5Notwithstanding the provisions of Section 11.4, the Company may request the Employee to retain his or her office as a director notwithstanding the termination of his or her employment, in which case the Employee shall become a non-executive director of the Company or of its subsidiary companies.
11.6The Employee hereby indemnifies the Company (and their respective officers, managers and employees) in respect of any claims, losses, costs or expenses whatsoever (including indirect and consequential damages) which may be suffered or incurred by any of them arising out of or in connection with the Employee refusing for any reason whatsoever to resign from and/or vacate any office as a director or other position contemplated in Section 11.4 for purposes of having to have the Employee removed as a director of the Company or a subsidiary company.
Section 12 Confidential Information
12.1The Employee agrees to keep the affairs and Confidential Information (as defined below) of the Company strictly confidential and shall not disclose the same to any person, company or firm, directly or indirectly, during or after his or her employment by the Company except as authorized in writing by the Board. "Confidential Information" includes, without limitation, the following types of information or material, both existing and contemplated, regarding the Company: corporate information, including contractual licensing arrangements, plans, strategies, tactics, policies, resolutions, patent, trade-mark and trade name applications; any litigation or negotiations; information concerning suppliers; marketing information, including sales, investment and product plans, customer lists, strategies, methods, customers, prospects and market research data; financial information, including cost and performance data, debt arrangements, equity structure, investors and holdings; operational and scientific information, including trade secrets; technical information, including technical drawings and designs; any information relating to any mineral projects in which the Company has an actual or potential interest; and personnel information, including personnel lists, resumes, personnel data, organizational structure and performance evaluations. The Employee agrees not to use such information, directly or indirectly, for his or her own interests, or any interests other than those of the Company, whether or not those interests conflict with the interests of the Company during or after his or her employment by the Company. The Employee expressly acknowledges and agrees that all information relating to the Company, whether financial, technical or otherwise shall, upon execution of this Agreement and thereafter, as the case may be, be the sole property of the Company, whether arising before or after the execution of this Agreement. The Employee expressly agrees not to divulge any of the foregoing information to any person, partnership, company or other legal entity or to assist in the disclosure or divulging of any such information, directly or indirectly, except as required by law or as otherwise authorized in writing by the Board. The provisions of Section 12 shall survive the termination of this Agreement.
12.2The Employee agrees that all documents of any nature pertaining to the activities of the Company, including Confidential Information, in the Employee's possession now or at any time during the Employee's period of employment, are and shall be the property of the Company and that all such documents and copies of them shall be surrendered to the Company when requested by the Company.
Section 13 Non-Solicitation
13.1The Employee covenants and agrees that during his or her employment and for a period of twelve (12) months following the date of termination of his or her employment, however caused, the Employee will not on his or her own behalf or on behalf of any person, whether directly or indirectly, in any capacity whatsoever, alone, through or in connection with any person, employ, engage, offer employment or engagement to or solicit the employment or engagement of or otherwise entice away an employee or officer of the
Company, whether or not such person would commit any breach of their contract of employment by reason of leaving their service.
13.2The Employee agrees that a breach by him or her of any of the covenants contained in this Section 13 would result in damages that could not adequately be compensated by monetary award. Accordingly, the Employee agrees that in the event of any such breach, in addition to all other remedies available at law the Company will be entitled as a matter of right to apply to a court of competent jurisdiction for such relief by way of an interdict to ensure compliance with the provisions of this Agreement.
13.3The Employee further agrees that a breach by him or her of any of the covenants contained in this Section 13 constitutes cause to terminate the Employee’s employment.
Section 14 Representations and Warranties
The Employee represents and warrants to the Company that the execution and performance of this Agreement will not result in or constitute a default, breach or violation or an event that, with notice or lapse of time or both, would be a default, breach or violation of any understanding, agreement or commitment, written or oral, express or implied, to which the Employee is currently a party or by which the Employee or Employee's property is currently bound.
Section 15 Governing Law
This Agreement shall be construed and enforced in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable in the Province of British Columbia. Any action or proceeding brought by a party arising out of or in connection with this Agreement shall be brought solely in a court of competent jurisdiction located in the Province of British Columbia, Canada. The parties agree not to contest such exclusive jurisdiction or seek the transfer of any action relating to such dispute to any other jurisdiction. Each of the Parties hereby submits to personal jurisdiction and waives any objection as to venue in the Province of British Columbia.
Section 16 Entire Agreement
This Agreement constitutes the entire agreement between the parties hereto with respect to the relationship between the Company and the Employee and supersedes all prior arrangements and agreements, whether oral or in writing between the parties hereto with respect to the subject matter hereof.
Section 17 Amendments
No amendment to or variation of the terms of this Agreement will be effective or binding upon the parties hereto unless made in writing and signed by both of the parties hereto.
Section 18 Assignment
This Agreement is not assignable by the Employee. This Agreement is assignable by the Company to any other company that controls, is controlled by, or is under common control with the Company. This Agreement shall enure to the benefit of and be binding upon the Company and its successors and permitted assigns and the Employee and his or her heirs, executors and administrators.
Section 19 Severability
Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of the prohibition or unenforceability and
shall be severed from the balance of this Agreement, all without affecting the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
Section 20 Headings
The division of this Agreement into Sections and the insertion of headings are for convenience or reference only and shall not affect the construction or interpretation of this Agreement.
Section 21 Time of Essence
Time shall be of the essence in all respects of this Agreement.
Section 22 Independent Legal Advice
The Employee agrees that he or she has had, or has had the opportunity to obtain, independent legal advice in connection with the execution of this Agreement and has read this Agreement in its entirety, understands its contents and is signing this Agreement freely and voluntarily, without duress or undue influence from any party.
Section 23 Notice
23.1Any notice required or permitted to be made or given under this Agreement to either party shall be in writing and shall be sufficiently given if delivered personally, by electronic transmission, or if sent by prepaid registered mail to the intended recipient of such notice at their respective addresses set forth below or to such other address as may, from time to time, be designated by notice given in the manner provided in this Section:
(a)in the case of the Company:
Ivanhoe Electric Inc.
#606 – 999 Canada Place
Vancouver, BC Canada V6C 3E1 Attention: Human Resources Email: hrservices@ivancorp.com
(b)in the case of the Employee, at the address set forth on the first page hereof or by email at Glen.Kuntz@ivanhoeelectric.com.
23.2Any notice hand-delivered to the party to whom it is addressed shall be deemed to have been given and received on the day it is so delivered or, if such day is not a business day, then on the next business day following any such day. Any notice delivered by registered mail shall be deemed to have been given and received on the 10th business day following the date of mailing. In the case of facsimile transmission, notice is deemed to have been given or served on the party to whom it was sent at the time of dispatch if, following transmission, the sender receives a transmission confirmation report or, if the sender's facsimile machine is not equipped to issue a transmission confirmation report, the recipient confirms in writing that the notice has been received. In the case of e-mail transmission, notice is deemed to have been given or served on the party to whom it was sent at the time of dispatch if, following transmission, the recipient confirms by e-mail or telephone call that the notice has been received. Notwithstanding the above, no notice will be deemed to have been given to the Employee while on site, or traveling to and from a site unless such notice is hand-delivered to the Employee or the Employee confirms that he or she has received delivery of the notice by another method.
Section 24 Counterparts
This Agreement may be executed in counterparts and shall become operative when each party has executed and delivered at least one counterpart.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year first above written.
IVANHOE ELECTRIC INC.
| By:/s/ Eric Finlayson | ||
| Eric Finlayson | ||
| President | ||
SIGNED by the Employee in the presence of:
By:/s/ Glen Kuntz | ||
| Glen Kuntz | ||
Witness Signature
Sherry Kudlacek
Witness Name - Print
Appendix “A”
EMPLOYEE INVENTIONS AND PROPRIETARY RIGHTS ASSIGNMENT AGREEMENT
This Employee Inventions and Proprietary Rights Assignment Agreement (this “Agreement”) made as of the 24th day of January 2022 with Global Mining Management Corporation including all participating shareholders or “Related Entities” (collectively, the “Company”). In consideration of my employment or continued employment by the Company, the compensation now and hereafter paid to me, and for other good and valuable consideration, the receipt of which is hereby acknowledged, I hereby agree as follows:
1.NON-DISCLOSURE
1.1Trust and Confidence. I acknowledge that my employment creates a relationship of trust and confidence between me and the Company with respect to any information: (a) applicable to the business of the Company; or applicable to the business of any client or customer of the Company, which may be made known to me by the Company or by any client or customer of the Company, or learned by me in such context during the period of my employment.
1.2Proprietary Information. The term “Proprietary Information” shall mean any and all confidential or proprietary knowledge, data or information of the Company. By way of illustration but not limitation, Proprietary Information includes: (a) trade secrets, inventions, ideas, processes, formulas, artwork, apparatus, equipment, algorithms, programs, source and object codes, software source documents, data, programs, techniques, sketches, drawings, models, other works of authorship, improvements, innovations, discoveries, developments, designs, and techniques (hereinafter collectively referred to as “Inventions”); (b) information regarding plans for research or development, or actual or contemplated products or services of the Company; (c) technical product, process or service information;
(d) information regarding manufacturing or development processes; (e) information regarding budgets or unpublished financial statements, or historic, current or projected financial information, or data about sales, other revenues, prices, costs, margins, expenses, profits, losses, taxes, income, assets, liabilities, shareholders’ equity, or cash flow; (f) information regarding marketing plans, customers, suppliers, price lists, markets, or marketing or distribution channels; (g) information regarding business opportunities, business plans, strategies, partnerships, licensing arrangements, contracts or other legal information; or
(h) information regarding the skills and compensation of other employees of the Company. Proprietary Information does not include information which I can clearly prove: (a) is readily available to the public in the same form through no fault of myself; (b) did not originate from the Company and was lawfully obtained by me in the same form from an independent third party without any restrictions on disclosure; or (c) did not originate from the Company and was in my possession in the same form prior to disclosure to me by the Company.
1.3Recognition of the Company’s Rights; Non-disclosure. At all times during my employment and thereafter, I will hold in strictest confidence and will not disclose, use, lecture upon or publish any of the Company’s Proprietary Information, except as such disclosure, use or publication may be required in connection with my work for the Company, or unless an officer of the Company expressly authorizes such in writing. I will obtain the Company’s written approval before publishing or submitting for publication any material (written, verbal, or otherwise) that relates to my work at the Company and/or incorporates any Proprietary Information. I hereby assign to the Company any rights I may have or acquire in such Proprietary Information and recognize that all Proprietary Information shall be the sole property of the Company and its assigns. Notwithstanding the foregoing, it is
understood that, at all times, I am free to use information which is generally known in the trade or industry, which is not gained as result of a breach of this Agreement, and my own skill, knowledge, know-how and experience to whatever extent and in whichever way I wish.
(A)Third Party Information. I understand, in addition, that the Company has received and in the future will receive from third parties confidential or proprietary information (“Third Party Information”) subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. During the term of my employment and thereafter, I will hold Third Party Information in the strictest confidence and will not disclose to anyone (other than the Company personnel who need to know such information in connection with their work for the Company) or use (except in connection with my work for the Company) Third Party Information unless expressly authorized by an officer of the Company in writing.
(B)No Improper Use of Information of Prior Employers and Others. During my employment by the Company I will not improperly use or disclose any confidential information or trade secrets, if any, of any former employer or any other person to whom I have an obligation of confidentiality, and I will not bring onto the premises of the Company any unpublished documents or any property belonging to any former employer or any other person to whom I have an obligation of confidentiality unless consented to in writing by that former employer or person. I will use in the performance of my duties only information which is generally known and used by persons with training and experience comparable to my own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company.
(a)ASSIGNMENT OF INVENTIONS.
(A)Proprietary Rights. The term “Proprietary Rights” shall mean all trade secret, patent, invention, improvement, copyright, industrial design, artistic design, trademark, service mark, trade or business name, and other intellectual property rights throughout the world and includes, without limitation, the right to apply for registration or protection of any of the foregoing.
(B)Prior Inventions. Inventions, if any, patented or unpatented, which I made prior to the commencement of my employment with the Company are excluded from the scope of this Agreement. To preclude any possible uncertainty, I have set forth on Exhibit A (Previous Inventions) attached hereto a complete list of all Inventions that I have, alone or jointly with others, conceived, developed or reduced to practice or caused to be conceived, developed or reduced to practice prior to the commencement of my employment with the Company, that I consider to be my property or the property of third parties and that I wish to have excluded from the scope of this Agreement (collectively referred to as “Prior Inventions”). If disclosure of any Prior Invention would cause me to violate any prior confidentiality agreement, I understand that I am not to list such Prior Invention in Exhibit A but am only to disclose a cursory name for each such invention, a listing of the party(ies) to whom it belongs, and the fact that full disclosure as to such invention has not been made for that reason. A space is provided on Exhibit A for this purpose. If no such disclosure is attached, I represent that there are no Prior Inventions. If, in the course of my employment with the Company, I incorporate a Prior Invention into a Company product, process or machine, the Company is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license (with rights to sublicense through multiple tiers of sub- licensees) to make, have made, modify, use and sell such Prior Invention. Notwithstanding the foregoing, I agree that I will not incorporate, or permit to be incorporated, Prior Inventions in any Company Inventions without the Company’s prior written consent.
(C)Prior Work. All previous work done by me for the Company relating in any way to the conception, design, development or support of products for the Company is the property of the Company.
(D)Assignment of Inventions. Subject to Section 2.7, I hereby assign and agree to assign in the future (when any such Inventions or Proprietary Rights are first reduced to practice or first fixed in a tangible medium, as applicable) to the Company all my right, title and interest in and to any and all Inventions (and all Proprietary Rights with respect thereto) whether or not patentable or registrable under copyright or similar statutes, which I may solely or jointly conceive, reduce to practice, create, derive, develop or make during the period of my employment with the Company, which either (a) relate, at the time of conception, reduction to practice, creation, derivation, development, or making of such Innovation, to the Company’s business or actual or demonstrably anticipated research or development, or (b) were developed on any amount of the Company’s time or with the use of any of the Company’s equipment, supplies, facilities or trade secret information, or (c) resulted from any work I performed for the Company. Inventions assigned to the Company, or to a third party as directed by the Company pursuant to this Section 2, are hereinafter referred to as “the Company Inventions”.
(E)Waiver of Moral Rights. I agree that the Company, its successors and assignees and their licensees are not required to designate me as the author of any Proprietary Information and the Company Inventions (collectively, “Developments”). I hereby waive in whole all moral rights which I may have in the Developments, including the right to the integrity of the Developments, the right to be associated with the Developments, the right to restrain or claim damages for any distortion, mutilation or other modification of the Developments, and the right to restrain use or reproduction of the Developments in any context and in connection with any product, service, cause or institution.
(F) Obligation to Keep the Company Informed. During the period of my employment and for twelve (12) months after termination of my employment with the Company, I will promptly disclose to the Company fully and in writing all Inventions authored, conceived or reduced to practice by me, either alone or jointly with others. In addition, I will promptly disclose to the Company all patent applications filed by me or on my behalf within a year after termination of employment. I will preserve the confidentiality of any Invention covered by this Section.
(G)Government or Third Party. I also agree to assign all my right, title and interest in and to any particular the Company Invention to a third party, including without limitation a government entity, as directed by the Company.
(H)Enforcement of Proprietary Rights. I will assist the Company in every proper way to obtain, and from time to time enforce, Canadian and foreign Proprietary Rights relating to the Company Inventions in any and all countries. To that end I will execute, verify and deliver such documents and perform such other acts (including appearances as a witness) as the Company may reasonably request for use in applying for, obtaining, perfecting, evidencing, sustaining and enforcing such Proprietary Rights and the assignment thereof. In addition, I will execute, verify and deliver assignments of such Proprietary Rights to the Company or its designee. My obligation to assist the Company with respect to Proprietary Rights relating to such the Company Inventions in any and all countries shall continue beyond the termination of my employment, but the Company shall compensate me at a reasonable rate after my termination for the time actually spent by me at the Company’s request on such assistance.
In the event the Company is unable for any reason, after reasonable effort, to secure my signature on any document needed in connection with the actions specified in the preceding paragraph, I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact, which appointment is coupled with an interest, to act for and in my behalf to execute, verify and file any such documents and to do all other lawfully permitted acts to further the purposes of the preceding paragraph with the same legal force and effect as if executed by me. I hereby waive, release and quitclaim to
the Company any and all claims, of any nature whatsoever, which I now or may hereafter have for infringement of any Proprietary Rights assigned hereunder to the Company.
2.RECORDS. I agree to keep and maintain adequate and current records (in the form of notes, sketches, drawings and in any other form that may be required by the Company) of all Proprietary Information developed by me and all Inventions made by me during the period of my employment at the Company, which records shall be available to and remain the sole property of the Company at all times.
3.NO IMPACT ON OTHER STATUTORY OBLIGATIONS. The terms of this Agreement are in addition to, and not in lieu of, any other statutory obligation that I may have relating to the protection of Company Inventions, Third Party Information, or Proprietary Information of the Company.
4.NO CONFLICTING OBLIGATION. I represent that my performance of all the terms of this Agreement and as an employee of the Company does not and will not breach any agreement to keep in confidence information acquired by me in confidence or in trust prior to my employment by the Company. I have not entered into, and I agree I will not enter into, any agreement either written or oral in conflict with this Agreement.
5.RETURN OF ALL COMPANY DOCUMENTS AND MATERIALS. When I leave my employment with the Company for any reason, I will deliver to the Company any and all written and tangible material in my possession, including but not limited to drawings, notes, memoranda, specifications, devices, formulas and documents, together with all copies thereof, and any other material containing or disclosing any Company Inventions, Third Party Information, or Proprietary Information of the Company.
6.LEGAL AND EQUITABLE REMEDIES. Because I may have access to and become acquainted with the Proprietary Information of the Company and because a breach of this Agreement will result in irreparable harm to the Company for which there will be no adequate remedy at law, the Company shall have the right to enforce this Agreement and any of its provisions by injunction, specific performance or other equitable relief, without the requirement to post security and without prejudice to any other rights and remedies that the Company may have for a breach of this Agreement.
7.NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employment with the Company, I hereby consent to the notification of my new employer of my rights and obligations under this Agreement.
8.GENERAL PROVISIONS.
9.1Survival. The provisions of this Agreement shall survive the termination of my employment for any reason and the assignment of this Agreement by the Company to any successor in interest or other assignee.
9.2Successors and Assigns. This Agreement will be binding upon my heirs, executors, administrators and other legal representatives and will be for the benefit of the Company and its successors and assigns.
9.3Notice. Any notices required or permitted hereunder shall be given to the appropriate party at the address specified below or at such other address as the party shall specify in writing. Such notice shall be deemed given as indicated: (i) upon personal delivery to the appropriate address; (ii) by overnight courier upon written verification of receipt; (iii) by facsimile transmission upon acknowledgement of receipt of electronic transmission; or (iv) by certified or registered mail, return receipt requested, upon verification of receipt.
Notices to the employee shall be sent to the current address in the Company's records or such other address as the employee may specify in writing. Notices to the Company shall be sent to the Company's Human Resources Department or to such other address as the Company may specify in writing.
9.4Governing Law; Consent to Jurisdiction. This Agreement will be governed by and construed according to the laws of British Columbia and the federal laws of Canada applicable therein, without regard to conflicts of laws principles. I irrevocably submit to and accept generally and unconditionally the exclusive jurisdiction of the courts and appellate courts of British Columbia for any action or lawsuit filed there against me by the Company arising from or related to this Agreement. I irrevocably waive any objection I may now or in the future have to the venue of any such action or lawsuit, and any claim I may now or in the future have that any such action or lawsuit has been brought in an inconvenient forum.
9.5Severability. In case any one or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect the other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. If moreover, any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, it shall be construed by limiting and reducing it, so as to be enforceable to the extent compatible with the applicable law as it shall then appear.
9.6Employment. I agree and understand that nothing in this Agreement shall confer any right with respect to continuation of employment by the Company, nor shall it interfere in any way with my right or the Company’s right to terminate my employment at any time, with or without cause.
9.7Assignment. I cannot assign any of its rights, interest or obligations under this Agreement without the prior written consent of the Company.
9.8Waiver. No waiver by the Company of any breach of this Agreement shall be a waiver of any preceding or succeeding breach. No waiver by the Company of any right under this Agreement shall be construed as a waiver of any other right. The Company shall not be required to give notice to enforce strict adherence to all terms of this Agreement.
9.9Entire Agreement. This Agreement is the final, complete and exclusive agreement of the parties with respect to the subject matter hereof and supersedes and merges all prior discussions between us. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing and signed by the party to be charged. Any subsequent change or changes in my duties, salary or compensation will not affect the validity or scope of this Agreement.
9.10Counterparts. This Agreement may be executed and delivered in counterparts. Each counterpart may be delivered by any means of electronic communication capable of producing a printed copy. Each counterpart so delivered shall be deemed an original and all counterparts together shall form one and the same document.
This Agreement shall be effective as of the 24th day of January 2022.
I HAVE READ THIS AGREEMENT, UNDERSTAND IT, HAVE HAD THE OPPORTUNITY TO OBTAIN INDEPENDENT LEGAL ADVICE IN RESPECT OF IT, AND AGREE TO ITS TERMS. I ACKNOWLEDGE THAT I HAVE COMPLETELY FILLED OUT EXHIBIT A TO THIS AGREEMENT. I FURTHER ACKNOWLEDGE HAVING RECEIVED A FULLY EXECUTED COPY OF THIS AGREEMENT.
GLOBAL MINING MANAGEMENT CORPORATION
| By:/s/ Leslie Lowry | ||
| Leslie Lowry | ||
| President | ||
IVANHOE ELECTRIC INC.
| By:/s/ Eric Finlayson | ||
| Eric Finlayson | ||
| President | ||
By:/s/ Glen Kuntz | ||
| Glen Kuntz | ||
Exhibit A
PRIOR INVENTIONS
TO: GLOBAL MINING MANAGEMENT CORPORATION
DATE: January 24, 2022
FROM: Glen Kuntz SUBJECT: Previous Inventions
1.Except as listed in Section 2 below, the following is a complete list of all inventions or improvements relevant to the subject matter of my employment with Ivanhoe Electric Inc. (the “Company”) that have been made or conceived or first reduced to practice by me alone or jointly with others prior to my employment by the Company:
No inventions or improvements.
See below:
Additional sheets attached.
2.Due to a prior confidentiality agreement, I cannot complete the disclosure under Section 1 above with respect to inventions or improvements generally listed below, the proprietary rights and duty of confidentiality with respect to which I owe to the following party(ies):
Invention or Improvement Party(ies) Relationship
Additional sheets attached.
Exhibit 10.2
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 4th day of January, 2023.
BETWEEN:
IVANHOE ELECTRIC INC., a Delaware corporation, having an office at Suite 606-999 Canada Place,
Vancouver, British Columbia, Canada, V6C 3E1
(the "Company'')
AND:
CASSANDRA PULSKAMP JOSEPH, ESQ., residing at _________________________________
(the "Employee")
WHEREAS:
(A)Ivanhoe Electric Inc. is a technology-led mineral exploration company with corporate offices located in Vancouver, British Columbia, Canada, Casa Grande, Arizona, and to be established in Phoenix, Arizona. Through subsidiaries and investment, the Company funds and manages exploration programs in several jurisdictions globally but with a focus on the United States;
(B)the Company wishes to engage the Employee as the Vice President, General Counsel and Corporate Secretary of the Company;
(C)the Employee's payroll and benefit plans and other related employee costs provided hereunder may be administered by Global Mining Management Corporation ("Global"), and if so administered all related costs will be paid by the Company in accordance with the Global Mining Management Corporation Shareholders' Corporate Management and Cost Sharing Agreement dated December 4, 2013, as amended January 1, 2016;
(D)the Company wishes to employ the Employee and the Employee wishes to be employed by the Company on the terms of this Agreement; and
(E)the Parties hereto wish to enter into this Agreement for the purpose of fixing the compensation and terms applicable to the employment of the Employee during the period hereinafter set forth.
NOW THEREFORE THIS AGREEMENT WITNESSES that the Company and the Employee (collectively the "Parties"), as Parties hereto, in consideration of the respective covenants and agreements on the part of each of them, herein contained, and each intending to be legally bound hereby, do hereby covenant and agree as follows:
Section 1 Employment
1.1The Company hereby engages the Employee, and the Employee acknowledges and agrees, to perform the function of Vice President, General Counsel and Corporate Secretary of the Company (the "Position"), initially based in Reno, Nevada reporting to the President and Chief Executive Officer of the Company (the "CEO"). Within one (1) year from the effective date of this Agreement, the Company and the Employee shall have discussed in good faith the need to employ another qualified individual, other than Employee, to assume the role of the Company’s Corporate Secretary or as an Assistant Corporate Secretary. Such individual shall be identified by the Employee, but employment shall be subject to CEO and Board (as defined below) approval and shall report to the General Counsel if hired. The Employee’s compensation shall not be negatively affected as a result of her change in Corporate Secretarial duties.
1.2In fulfilment of the Position, the Employee will carry out such duties and responsibilities as are customarily performed by persons in such role within the industry and such other duties as the Company or the CEO may assign from time to time. The Company reserves the right to amend the Employee's duties, responsibilities and powers from time to time in its sole discretion.
1.3The Employee will be expected to travel outside of the work location where currently based, to the Company's offices, project sites and other locations as required. The Company will establish a corporate headquarter office in Phoenix, Arizona (“Phoenix Office”), and accordingly, the Employee is expected to relocate to the Phoenix area and work from the Phoenix Office in the future. The timing of such relocation to the Phoenix area by the Employee will be subject to further agreement between the Company and the Employee, each acting reasonably, and based upon the prevailing work requirements at the time and Employee's personal considerations. In any event, the relocation to the Phoenix area shall take place before December 31, 2023, unless otherwise agreed between the Company and the Employee. The costs associated with such relocation to the Phoenix Office will be paid by the Company, the particulars of which will be subject to further agreement between the Company and the Employee, each acting reasonably.
Section 2 Term
This Agreement will be effective from February 1, 2023 and will remain in full force and effect until terminated as hereinafter provided.
Section 3 Responsibility
Subject to the approval and/or ratification of the Board of Directors (the "Board") in accordance with Company policies regarding delegation of authorities and the CEO, the Employee will have the authority and duty to perform and carry out such duties and responsibilities as are customarily carried out by persons holding similar positions in other companies comparable in size to the Company and such additional and related duties as may from time to time be assigned, delegated, limited or determined by the Board and/or the CEO.
Section 4 Other Activities
4.1The Employee's employment hereunder shall be substantially full-time and exclusively for the benefit of the Company, except as permitted herein.
4.2The Employee agrees not to undertake, or be engaged in the performance of, any work, services or other business activity (which does not include charitable or philanthropic endeavors that do not materially interfere with the Employee's employment hereunder), directly or indirectly, for any other person, firm, company, other legal entity or governmental agency or organization, with the exception of:
(a)the Employee's employment with the Company;
(b)the Employee’s directorship with Cypress Development Corp., but provided such directorship ceases by not later than July 30, 2023;
(c)any other pre-existing arrangements in effect at the date of this Agreement that have been notified to the Board and agreed (“Grandfathered Arrangements”) but provided that any such Grandfathered Arrangements shall remain subject to the Company’s policies governing such arrangements and any changes that may occur from time to time; and
(d)a 6-month limited transition support consulting agreement with Nevada Copper Inc.,
unless it is determined by prior written approval of the Board or the CEO that such activities will not interfere with, or impede, in any significant manner the performance of Employee's duties in the Position, and further provided that:
(e)before the Employee can engage in any work, services or other business activity which involves the Employee owning or acquiring any interest in excess of five percent, directly or indirectly, in any mining or technology company or the rendering of any advice or service to another person, partnership or other legal entity or a joint venture engaged in the business of exploring for and/or mining minerals, the Employee must disclose full particulars thereof in writing to the Board and the CEO, and, within 15 days after the date of such disclosure, the Employee must receive from the Board or the CEO a decision that such activities by the Employee will not, in the opinion of the Board or the CEO, interfere or be in conflict with the Employee's performance of her duties to the Company hereunder. If a decision is not received from the Board or the CEO within such 15- day period, the activities will be deemed to interfere or be in conflict with the Employee's performance of her duties to the Company hereunder unless and until a contrary decision is received from the Board or the CEO, and
(f)before engaging in any work, services or business activity other than the kind described in sub- paragraph (d) of this Section 4.2 or is a Grandfathered Arrangement, the Employee shall have disclosed same in writing to the Board; and
(g)notwithstanding the foregoing, the Employee may engage in work for an affiliate of the Company, including serving on the board of directors of any affiliate, consistent with her responsibilities for the Company to the extent agreed by the Board or the CEO.
4.3The Employee shall refer to the Board and the CEO any and all facts, matters and transactions that may adversely affect the Employee's relationship with the Company or the Employee's ability to perform her duties, or in respect of which an actual or potential conflict of interest between the Employee and the Company has arisen or may arise, and the Employee shall not proceed with any such matter or transaction until the Board's approval therefor is obtained. For purposes of clarification, this provision is not intended to limit in any way the Employee's other fiduciary obligations to the Company that may arise in law or in equity.
4.4Without limiting the generality of the foregoing, the Employee acknowledges, covenants and agrees that under no circumstances will her provision of services in the Position involve or include, nor will the Employee be asked by any director or officer of the Company to engage in, any activities contrary to the Corruption of Foreign Public Officials Act (Canada) or the United States Foreign Corrupt Practices Act and any other similar legislation in the jurisdiction in which the Employee is employed or to whose laws the Employee may be subject.
4.5The Employee shall adhere to the Company's policies in effect from time to time.
Section 5 Compensation
5.1In consideration of the performance by the Employee of her responsibilities and duties in the Position hereunder:
(a)The Company shall pay the Employee the sum of the Three Hundred Thousand United States Dollars ($300,000) (the "Base Salary") per year. The Base Salary and all other forms of compensation payable hereunder are subject to deduction for all applicable taxes, payroll deductions and withholdings required by law and otherwise in accordance with the payroll practices of the Company for similarly situated employees of the Company.
(b)The Base Salary will be reviewed annually and, if increased or decreased, such increased or decreased amount shall be the Base Salary hereunder provided however that the Base Salary may only be decreased as part of a general executive or company-wide reduction for cost savings or similar requirements.
(c)The Employee will be eligible to participate in the compensation plans of the Company in effect from time to time, subject to the terms of the applicable plans.
(d)The Employee will be eligible on an annual to receive short term and long term incentive awards, with a short-term bonus target of 100% of Base Salary ("Short Term Bonus") and a long-term bonus target of 200% of Base Salary for 2023, based on the terms and conditions of the Company's then effective annual incentive and equity-based incentive plans or programs as adopted by the Board upon recommendation by its Compensation Committee and contingent upon the degree of achievement of any applicable performance goals. Equity plans ("Equity Plans") shall include but not be limited to the 2022 Long Term Incentive Plan and associated award agreements, including but not limited to the Restricted Stock Unit Award Agreement and the Stock Option Agreement, and any similar agreements entered by the Parties hereafter. Targets for short term and long-term incentive awards will be reviewed and established by the Board and the Compensation Committee on an annual basis.
(i)The amount of the Short-Term Bonus that will be earned shall be determined based upon performance criteria and targets established by the Board and the Compensation Committee, and the achievement and/or satisfaction of such criteria and targets during the time employed. For example, if Employee is employed for a partial year, Employee shall receive the Short-Term Bonus on a pro rata basis that considers the degree of achievement and/or satisfaction of performance criteria and targets prior to Employee's separation from service and the number of months worked divided by the total number of months in the reporting year, subject to (ii) below.
(ii)Employee shall be entitled to receive the Short-Term Bonus regardless of employment status on the date the Short-Term Bonus is calculated or paid provided, however, that no Short-Term Bonus will be earned if the Employee's employment is terminated for Cause or by reason of voluntary termination.
(e)Effective February 1, 2023, the Company will make an initial grant of stock options ("Options") to the Employee under its equity incentive plan and in accordance therewith, such number of Options to equal 500,000 with a strike price of not less than $11.75 USD per share or at least equal to the fair market value per share on the date of grant if the market value is greater than $11.75 USD per share on the date of grants. Options and any future grant of Restricted Stock Units ("RSUs") will vest in accordance with the terms of the applicable Equity Plans. The Employee will not be eligible for further grants of incentive securities in 2023 but shall be eligible in 2024 in accordance with Section 5.1(d).
(f)The Employee will be eligible to participate in employee benefit plans (including health, medical, dental, and other insurance benefits) from time to time in effect for similarly situated employees of the Company, except to the extent such plans are duplicative of benefits otherwise provided to the Employee. The Employee's participation will be subject to the terms of the applicable plan documents and generally applicable policies of the Company. Employee’s health and medical benefits coverage shall begin on the effective date of this Agreement.
Section 6 Expenses
The Company will reimburse the Employee for any and all reasonable and documented expenses actually and necessarily incurred by the Employee in connection with the performance of her duties under this Agreement, including reasonable travel and lodging expenses associated with commuting from Reno, Nevada to Phoenix, Arizona until December 31, 2023, in accordance with the policies of the Company in effect from time to time. The Employee will furnish the Company with an itemized account of her expenses in such form or forms as may reasonably be required by the Company and at such times or intervals as may be required by the Company.
Section 7 Vacation
7.1The Employee will be entitled to a paid vacation of twenty-five (25) days within each calendar year period, pro-rated for partial calendar years, during the Term of this Agreement, to be calculated from the date of commencement of employment set forth in Section 2 herein. This vacation must be taken at such times that do not adversely compromise the Employee's performance of her duties under this Agreement. In addition to the vacation days described above, Employee is entitled to vacation from February 10-18, 2023.
7.2Subject to appliable employment standards legislation, the Employee may carry forward a maximum of ten (10) days' vacation from one entitlement year to the next. Any such vacation carried forward must be taken by 15 March of the subsequent year. Any unused vacation in excess of ten (10) days will be forfeited.
7.3All other responsibilities and rights (if any) of Employee relating to accrual of vacation benefits, requesting and using vacation benefits, and receipt of payment for accrued, unused vacation benefits upon separation from employment shall be governed by the terms and conditions of the Company's applicable policies, practices, and procedures, subject to applicable employment standards legislation.
Section 8 Indemnity
The Company shall defend, indemnify and hold harmless the Employee from any and all claims, damages, losses or costs to the extent provided by applicable law and the Company's organizational documents, including but not limited to, those relating to loss or damage to property, or injury to, or death of any person or persons arising from or out of the Employee's performance of her obligations under this Agreement.
Section 9 Consent to Use Personal Information
9.1The Employee acknowledges and agrees that the Company has the right to collect, use and disclose the terms and conditions of her employment and any other identifying personal information required to be disclosed for reporting or business purposes or otherwise by law, including:
(a)ensuring that she is paid for her services to the Company;
(b)administering any benefits to which she is or may become entitled to, including bonuses, medical, dental, disability and life insurance benefits, and/or annual bonuses and long-term incentive securities. This shall include the disclosure of her personal information to any insurance company and/or broker or to any entity that manages or administers the Company's benefits on behalf of the Company, subject to applicable laws;
(c)compliance with any regulatory reporting and withholding requirements relating to her employment; and
(d)in the event of a sale or transfer of all or part of the shares or assets of the Company, disclosing to any potential acquiring organization solely for the purposes of determining the value of the Company and its assets and liabilities and to evaluate the Employee's position in the Company. If the Employee's information is disclosed to any potential acquiring organization, the Company will require the potential acquiring organization to agree to use the information solely for the purpose of evaluating the Company and to protect the privacy of Employee's information in a manner that is consistent with any policy of the Company dealing with privacy that may be in effect from time to time and/or any applicable law that may be in effect from time to time.
9.2The Employee may withdraw her consent provided herein at any time. The Employee acknowledges that if she withdraws her consent, her entitlement to certain employment benefits provided by the Company may be negatively affected and in the event of a sale of business, the acquiring organization may not be in a position to offer continued employment due to a lack of personal information on the Employee.
Section 10 Termination
10.1This Agreement and the Employee's employment may be terminated as follows:
(a)By Employee on Voluntary Resignation: Upon receipt by the Company of the Employee's resignation, in writing, which shall be provided not less than six (6) months prior to the effective date of resignation. In these circumstances, during the 6-month notice period, the Employee shall receive as full and sole compensation: (i) Base Salary at the then current rate of pay; and
(ii) reimbursements that are due and owing Employee or that were earned or accrued on or before the effective date of termination, (collectively the "Accrued Obligations") together with any rights under the Company's employee benefit plans, including equity or equity-based compensation plans, which shall be governed solely by the terms of the Equity Plans. Employee agrees to faithfully perform and discharge all of her duties and responsibilities under this Agreement throughout the notice period until the effective date of her employment termination. At any time after receiving notice of Employee's resignation, the Company shall have the sole option to relieve Employee of her duties and/or to restrict Employee from accessing Company facilities or systems, communicating with Company employees or third parties about work-related matters, attending work-related events, or otherwise conducting business on Company's behalf. In all cases, the Employee will continue to be an employee throughout the notice period until the effective date of termination and will receive from the Company all Accrued Obligations through the effective date of resignation.
(b)By Company on Death or Disability of Employee: Forthwith on the death of the Employee or termination of service by reason of Disability, the Company shall have the right to terminate Employee by reason of "Disability" if Employee is unable to perform the essential functions of Employee's Position, with or without a reasonable accommodation, for either ninety (90) consecutive calendar days, or one hundred twenty (120) aggregate calendar days in a twenty- four (24) month period, by reason of any mental or physical illness, condition, impairment or incapacity. In these circumstances, the Employee (or her estate) shall be entitled to receive as full and sole compensation in discharge of the Company's obligations to the Employee under this Agreement, the Accrued Obligations, the Short-Term Bonus, if any, determined pursuant to Section 5.1(d)(i) and (ii), together with any rights under the Company's employee benefit plans, including the Equity Plans.
(c)By the Company without Cause: By the Company at any time, and for any reason whatsoever upon written notice of six (6) months, the Employee agrees to faithfully perform and discharge all of her duties and responsibilities under this Agreement
throughout the notice period until the effective date of her employment termination. At any time after delivering written notice of termination, the Company shall have the sole option to relieve Employee of her duties and/or to restrict Employee from accessing Company facilities or systems, communicating with Company employees or third parties about work-related matters, attending work-related events, or otherwise conducting business on Company's behalf. In all cases, the Employee will continue to be an employee throughout the notice period until the effective date of termination. Contingent upon the Employee's execution and non-revocation of a general mutual release of claims within twenty-one (21) days of termination in the form mutually agreed to by the Parties, or such other time period agreed to by the Parties, except for the Accrued Obligations which will be paid without regard to such release, on such a termination, the Employee will receive the following, as full and sole compensation in discharge of the Company's obligations to the Employee under this Agreement:
(i)the Accrued Obligations together with any obligations accrued and then owing under the Company's employee benefit plans;
(ii)a lump sum cash payment, less applicable withholdings, equal to 1.5 times Employee's annual Base Salary and 1.5 times the target annual bonuses for the year in which termination of employment occurs, which the Parties agree shall fully satisfy any Short Term Bonus payment owed pursuant to Section 5.1(d)(i) and (ii) hereof, payable on the forty-fifth (45th) day, or next succeeding business day if the 45th day is not a business day, following Employee's separation from service; and
(iii)the Employee's equity incentive awards will be governed in accordance with the terms of the applicable Equity Plans.
For greater certainty, this Section 10.1(c) shall not apply to a termination following a Change in Control under the circumstances provided for in Section 10.3(a).
(d)By the Company with Cause: The Company may terminate this Agreement, and Employee's employment hereunder, for Cause immediately upon written notice to Employee. In these circumstances, the Employee (or her estate) will be entitled to receive as full and sole compensation in discharge of the Company's obligations to the Employee under this Agreement, the Accrued Obligations together with any rights under the Company's employee benefit plans, including equity or equity-based compensation plans, which will be governed solely by the terms of such plans.
(e)For purposes of this Agreement, "Cause" shall be deemed to exist if any of the following circumstances exist, as determined by the Board, regardless of the timing of the precipitating events:
(i)Employee's willful failure to substantially perform her or her duties and responsibilities to the Company;
(ii)Employee's violation of a Company policy, after receiving thirty (30) days written notice from the Company of the precise policy and the Employee's conduct alleged to violate the policy, and Employee has failed to cure the violation within the 30-day notice period;
(iii)Employee's commission of any act of fraud, embezzlement, misappropriation, breach of fiduciary duty or duty of loyalty, dishonesty or any other intentional act of misconduct that has caused or is reasonably expected to result in material injury to the Company;
(iv)Employee has been convicted of or pled guilty or nolo contendere to a crime that constitutes a felony (or local law equivalent) or an indictable or hybrid offence or any crime or offence involving moral turpitude, if such crime or offence is (A) work-related, (B) impairs Employee's ability to perform services for the Company, or (C) results in reputational or financial harm to the Company;
(v)the unauthorized use or disclosure by Employee of any proprietary information or trade secrets of the Company or any other party to whom Employee owes an obligation of nondisclosure as a result of her Employment with the Company; or
(vi)Employee's breach of any of her or her obligations under any written agreement or covenant with the Company; or
(vii)the Employee has committed any act which results in either loss or damage to the Company or prejudice to its business standing or reputation, including any social media post or public comment made on the Internet or otherwise, or through the making of any disparaging comment or remark in any public forum or setting, provided, nothing herein prohibits Employee from making truthful statements protected by any applicable law.
(f)Notwithstanding the foregoing, the Employee's rights and entitlements with respect to any stock options and RSUs or any other equity incentive award or incentive bonus amount shall be in accordance with the relevant incentive plan(s) and award agreements.
10.2Notwithstanding Section 10.1(a) and (c), on or following the service of notice by either party for any reason to terminate this Agreement, the Company may at its sole and absolute discretion terminate the Employee's employment at any time and with immediate effect by providing the Employee all payments due in lieu of the notice period (or, if applicable, the remainder of the notice period) equivalent to the Base Salary at the date of termination for such period, in addition to the other Accrued Obligations required of the Company as set forth in Sections 10.1(a) and 10.1(c).
10.3
(a)If a Change in Control occurs and, at any time during the twelve (12) month period following such Change in Control, either (i) there occurs a termination of the Employee's employment by the Company, other than for Cause, or (ii) the Employee resigns employment for Good Reason, contingent upon the Employee's execution and non-revocation of a mutual general release of claims within twenty-one (21) days of termination in the form mutually agreed upon by the Parties, or such other time period agreed to by the Parties, except for the Accrued Obligations which will be paid without regard to such release, the Employee shall be entitled to receive:
(i)the Accrued Obligations together with any rights under the Company's employee benefit plans;
(ii)a lump sum cash payment, less applicable withholdings, equal to eighteen (18) months of Employee's annual Base Salary plus one (1) additional month for each full year of service after the third (3rd) full year of service up a maximum of twenty-four (24) months annual Base Salary together with 150% of the Short Term Bonus for the year in which termination of employment occurs, payable on the forty-fifth (45th) day, or next succeeding business day if the 45th day is not a business day, following Employee's separation from service; and
(iii)Employee's equity incentive awards shall be governed in accordance with the terms of the applicable Equity Plans and award grant agreements.
(b)For purposes of this Section 10.3, "Good Reason" means any of the following events, unless the Employee gives her express written consent thereto:
(i)a material adverse change in the Employee's Position as in effect immediately prior to a Change in Control. Such material adverse change shall mean a material diminution in the Employee's duties or authority or the assignment to the Employee of any duties or responsibilities which are materially inconsistent with such Position. Notwithstanding the foregoing, Good Reason shall not be deemed to occur upon a change in the Employee's duties or responsibilities that is solely a result of the Company no longer being publicly traded;
(ii)a material reduction by the Company in the Employee's annual Base Salary as in effect immediately prior to a Change in Control;
(iii)a material failure by the Company to continue in effect any employee benefit program in which the Employee is participating at the time of a Change in Control other than as a result of the normal expiration of any such employee benefit program in accordance with its terms as in effect at the time of a Change in Control or replacement of such benefit program with a comparable program, or the taking of any action, or the failure to act, by the Company which would materially and adversely affect the Employee's continued participation in any such employee benefit program on at least as favorable a basis to the Employee as on the date of a Change in Control;
(iv)the Company requiring the Employee to be based in a location more than 50 miles from where the Employee is based at the time of a Change in Control, except as expressly contemplated by this agreement for relocation to Phoenix, Arizona and except for required travel on the Company's business to an extent substantially consistent with the Employee's business travel obligations in the ordinary course of business immediately prior to the Change in Control;
(v)the Company repudiating or breaching any of its material obligations under this Agreement; or
(vi)the Company requiring the Employee to report to a person of lesser authority or standing than that set forth in Section 1.1; provided that a general change in overall reporting structure bona fide entered into by the Company in the interests of improved management of its business and not limited to the individual Employee, shall not be a change in reporting responsibilities as contemplated by this clause.
(c)Notwithstanding the foregoing, to constitute Good Reason hereunder, the Employee must give notice to the Company within 30 days following the Employee's knowledge of an event constituting Good Reason describing the alleged failure or action by the Company in respect of the events set out in clauses (i) to (vi) above and advising the Company of the Employee's intention to terminate the Employee's employment for Good Reason. If the Employee fails to provide such notice within 30 days, such event shall not constitute Good Reason under this Agreement. Following receipt of such notice from the Employee, the Company shall then have 30 business days to take any required corrective action to rectify or rescind such event (and if such event is so rectified or rescinded, such event shall not constitute Good Reason)
and to notify the Employee in writing that it has completed such rectification or rescindment, or to notify the Employee that it denies the occurrence of such event.
(d)A notice of resignation for Good Reason in accordance with the foregoing will be deemed to have occurred within the twelve (12) month period following a Change in Control provided the Employee gives the required notice to the Company prior to the end of such twelve (12) month period.
(e)The payments provided for in paragraph (a) under this Section 10.3 shall be inclusive of the Employee's entitlement to notice and severance pay at common law or by statute. The Company shall not be obligated to make any further payments under this Agreement, except for the payment of any reasonable expenses due and owing pursuant to Section 6.
(f)For the purposes of this Agreement, "Change in Control" means any of the following events occurring after the date hereof:
(i)a transaction or series of transactions whereby any "person" or related "group" of "persons" (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) directly or indirectly acquires beneficial ownership (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) of securities of the Company possessing more than 50% of the total combined voting power of the Company's securities outstanding immediately after such acquisition; provided however that the following acquisitions shall not constitute a Change in Control: (i) any acquisition by the Company or any of its Subsidiaries; (ii) any acquisition by an employee benefit plan maintained by the Company or any of its Subsidiaries, (iii) any acquisition which complies with Sections 10.3(f)(iii)(I), 10.3(f)(iii)(II) and 10.3(f)(iii)(III) or (iv); in respect of an Award (as defined in the Company's Long Term Incentive Plan) held by a particular Holder, any acquisition by the Holder or any group of persons including the Holder (or any entity controlled by the Holder or any group of persons including the Holder);
(ii)the Incumbent Directors, as defined in the Company's Long Term Incentive Plan, or successor plan, cease for any reason to constitute a majority of the Board;
(iii)the consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination, (y) a sale or other disposition of all or substantially all of the Company's assets in any single transaction or series of related transactions or (z) the acquisition of assets or stock of another entity, in each case other than a transaction:
(I)which results in the Company's voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company's assets or otherwise succeeds to the business of the Company (the Company or such person, the "Successor Entity")) directly or indirectly, at least a majority of the combined voting power of the Successor Entity's outstanding voting securities immediately after the transaction, and
(II)after which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the Successor Entity; provided however that no person or group shall be treated for purposes of this Section as beneficially owning 50% or more of the combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction; and
(III)after which at least a majority of the board of directors (or the analogous governing body) of the Successor Entity were Board members at the time of the Board's approval of the execution of the initial agreement providing for such transaction; or
(iv)the date which is 10 business days prior to the completion of a liquidation or dissolution of the Company.
Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any amount that provides for the deferral of compensation that is subject to Section 409A of the Code, to the extent required to avoid the imposition of additional taxes under Section 409A, the transaction or event described in subsection (i), (ii), (iii) or (iv) with respect to such payment (or portion thereof) shall only constitute a Change in Control for purposes of the payment if such transaction also constitutes a "change in control event," as defined in Treasury Regulation Section 1.409A-3(i)(S).
10.4The Employee agrees that the notice, pay in lieu of notice (or a combination thereof) together with the benefits set out in Sections 10.1(c) or 10.3 shall be in full and final settlement of any and all actions, causes of actions, suits, claims, demands and entitlements whatsoever which the Employee has or may have, whether pursuant to statute, common law or otherwise, against the Company and any of its directors, officers, employees, representatives, successors and assigns, arising out of the Employee's hiring, employment and the termination of the Employee's employment or this Agreement and the Employee expressly waives any and all entitlement to reasonable notice or pay in lieu thereof pursuant to common law. The amounts and benefits set out in Sections 10.1(c) and 10.3 in excess of employment standards minimums are conditional upon the Employee executing a full and final release in favour of the Company, in a form acceptable to the Company.
10.5If this Agreement is terminated by either party while the Employee is on site at any work location other than where the Employee is otherwise based, regardless of the circumstances or the reason for termination, the Company will reimburse the Employee for her return flight home and any change fees that are incurred by the Employee.
Section 11 Directorships and Other Offices
11.1The Company may from time to time in its discretion require the Employee to be nominated and appointed as a director or other officer or manager of the Company or of any of its subsidiary companies, and the Employee agrees to comply with each such request.
11.2If the Employee is a director or other officer or manager of the Company or of any of its subsidiary companies, the Company is not obliged to ensure that the Employee remains a director or other officer or manager of the Company or any subsidiary. The removal of the Employee as a director of the Company by reason of election by the Company's shareholders, or removal of the Employee as a director of a subsidiary, or removal from that other office or management position will not amount to a breach of this Agreement or constitute Good Reason or constitute grounds for termination with Cause.
11.3If the Employee is at any time not a director of the Company or of any of its subsidiary companies, then the Employee shall not be entitled to and shall not hold herself out as a
director and the removal of the term "Director" from the Employee's job title will not constitute a breach by the Company of this Agreement.
11.4Upon the termination of the Employee's employment by the Company for any reason (unless the Company in writing requires the Employee not to do so) the Employee hereby agrees to resign from and vacate each and every office as director of the Company or of any of its subsidiary companies and every other office or management position which she may hold in the Company or a subsidiary company to which she may have been appointed or elected, and for purposes hereof the Employee hereby irrevocably and unconditionally appoints any director of the Company or the company secretary of the Company as her agent or attorney to effect each such resignation.
11.5Notwithstanding the provisions of Section 11.4, the Company may request the Employee to retain her office as a director of the Company or a subsidiary notwithstanding the termination of her employment, in which case the Employee shall become a non-executive director of the Company or of its subsidiary companies and shall be entitled to receive compensation as a non-employee director of the Company or such subsidiary.
11.6The Employee hereby indemnifies the Company (and their respective officers, managers and employees) in respect of any claims, losses, costs or expenses whatsoever (including indirect and consequential damages) which may be suffered or incurred by any of them arising out of or in connection with the Employee refusing for any reason whatsoever to resign from and/or vacate any office as a director or other position contemplated in Section 11.4 for purposes of having to have the Employee removed as a director of the Company or a subsidiary company.
Section 12 Confidential Information
12.1The Employee agrees to keep the affairs and Confidential Information (as defined below) of the Company strictly confidential and shall not disclose the same to any person, company or firm, directly or indirectly, during or after her employment by the Company except as authorized in writing by the Board. "Confidential Information" includes, without limitation, the following types of information or material, both existing and contemplated, regarding the Company and which is not in the public domain or publicly available: corporate information, including contractual licensing arrangements, plans, strategies, tactics, policies, resolutions, patent, trade-mark and trade name applications; any litigation or negotiations; information concerning suppliers; marketing information, including sales, investment and product plans, customer lists, strategies, methods, customers, prospects and market research data; financial information, including cost and performance data, debt arrangements, equity structure, investors and holdings; operational and scientific information, including trade secrets; technical information, including technical drawings and designs; any information relating to any mineral projects in which the Company has an actual or potential interest; and personnel information, including personnel lists, resumes, personnel data, organizational structure and performance evaluations. The Employee agrees not to use such information, directly or indirectly, for her own interests, or any interests other than those of the Company, whether or not those interests conflict with the interests of the Company, during or after her employment by the Company. The Employee expressly acknowledges and agrees that all information relating to the Company, whether financial, technical or otherwise shall, upon execution of this Agreement and thereafter, as the case may be, be the sole property of the Company, whether arising before or after the execution of this Agreement. The Employee expressly agrees not to divulge any of the foregoing information to any person, partnership, company or other legal entity or to assist in the disclosure or divulging of any such information, directly or indirectly, except as required by law or as otherwise authorized in writing by the Board. The provisions of Section 12 shall survive the termination of this Agreement.
12.2The Employee agrees that all documents of any nature pertaining to the activities of the Company, including Confidential Information, in the Employee's possession now or at any time during the Employee's period of employment, are and shall be the property of the
Company and that all such documents and copies of them shall be surrendered to the Company when requested by the Company. The Employee shall be permitted to retain information that pertains to herself including her contacts.
Section 13 Non-Solicitation
13.1The Employee covenants and agrees that during her employment and for a period of twelve (12) months following the date of termination of her employment, however caused, the Employee will not on her own behalf or on behalf of any person, whether directly or indirectly, in any capacity whatsoever, alone, through or in connection with any person, employ, engage, offer employment or engagement to or solicit the employment or engagement of or otherwise entice away an employee or officer of the Company, whether or not such person would commit any breach of their contract of employment by reason of leaving their service.
13.2Employee agrees that the restrictions, including the duration, scope and geographic area for each, established under the covenants contained in this Section 13 are fair, reasonable and necessary in order to protect the legitimate interests of the Company, that Employee is receiving adequate consideration under this Agreement for such obligations, and that such obligations will not prevent the Employee from earning a livelihood during the time periods covered by the restrictive covenants.
13.3In the event Employee has violated any of the covenants contained in this Section 13, the time period covered by the restrictive covenant shall be tolled during the period in which the violation was occurring.
13.4The Employee agrees that a breach by her of any of the covenants contained in this Section 13 would result in the Company suffering damages which could not adequately be compensated by monetary award. Accordingly, the Employee agrees that in the event of any such breach or threatened breach, in addition to all other remedies available at law or in equity, the Company will be entitled as a matter of right to seek a temporary or permanent injunction or other equitable relief against such breach or threatened breach from any court of competent jurisdiction, without the necessity of showing any actual damages or that money damages would not afford an adequate remedy, and without the necessity of posting any bond or other security.
13.5The Employee further agrees that a breach by her of any of the covenants contained in this Section 13 constitutes Cause to terminate the Employee's employment.
Section 14 Representations and Warranties
The Employee represents and warrants to the Company that the execution and performance of this Agreement will not result in or constitute a default, breach or violation or an event that, with notice or lapse of time or both, would be a default, breach or violation of any understanding, agreement or commitment, written or oral, express or implied, to which the Employee is currently a party or by which the Employee or Employee's property is currently bound.
Section 15 Governing Law
This Agreement shall be construed and enforced in accordance with the laws of Arizona, without reference to principles of conflicts of laws. Any action or proceeding brought by a party arising out of or in connection with this Agreement shall be brought solely in a court of competent jurisdiction located in Arizona. To the extent permitted by law, the parties agree not to contest such exclusive jurisdiction or seek the transfer of any action relating to such dispute to any other jurisdiction. Each of the parties hereby submits to personal jurisdiction and waives any objection as to venue in Arizona.
Section 16 Entire Agreement
This Agreement constitutes the entire agreement between the parties hereto with respect to the relationship between the Company and the Employee and supersedes all prior arrangements and agreements, whether oral or in writing between the Parties hereto with respect to the subject matter hereof.
Section 17 Amendments
No amendment to or variation of the terms of this Agreement will be effective or binding upon the Parties hereto unless made in writing and signed by both of the Parties hereto.
Section 18 Assignment
This Agreement is not assignable by the Employee. This Agreement is assignable by the Company to any other company that controls, is controlled by, or is under common control with the Company. This Agreement shall enure to the benefit of and be binding upon the Company and its successors and permitted assigns and the Employee and his heirs, executors and administrators.
Section 19 Survival
Any provision of this Agreement which expressly states that it is to continue in effect after termination of this Agreement or the Employee's employment, or which by its nature would survive the termination of this Agreement or the Employee's employment, shall do so, regardless of the manner or cause of termination.
Section 20 Severability
Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of the prohibition or unenforceability and shall be severed from the balance of this Agreement, all without affecting the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
Section 21 Headings
The division of this Agreement into Sections and the insertion of headings are for convenience or reference only and shall not affect the construction or interpretation of this Agreement.
Section 22 Time of Essence
Time shall be of the essence in all respects of this Agreement.
Section 23 Notice
23.1Any notice required or permitted to be made or given under this Agreement to either party shall be in writing and shall be sufficiently given if delivered personally, by electronic transmission, or if sent by prepaid registered mail to the intended recipient of such notice at their respective addresses set forth below or to such other address as may, from time to time, be designated by notice given in the manner provided in this Section:
(a)in the case of the Company:
Ivanhoe Electric Inc.
#606 - 999 Canada Place Vancouver, BC Canada V6C 3El Attention: Human Resources Email: hrservices@ivancorp.com
(b)in the case of the Employee, at the address set forth on the first page hereof or _________________________________________________.
23.2Any notice hand-delivered to the party to whom it is addressed shall be deemed to have been given and received on the day it is so delivered or, if such day is not a business day, then on the next business day following any such day. Any notice delivered by registered mail shall be deemed to have been given and received on the 10th business day following the date of mailing. In the case of facsimile transmission, notice is deemed to have been given or served on the party to whom it was sent at the time of dispatch if, following transmission, the sender receives a transmission confirmation report or, if the sender's facsimile machine is not equipped to issue a transmission confirmation report, the recipient confirms in writing that the notice has been received. In the case of e-mail transmission, notice is deemed to have been given or served on the party to whom it was sent at the time of dispatch if, following transmission, the recipient confirms by e-mail or telephone call that the notice has been received. Notwithstanding the above, no notice will be deemed to have been given to the Employee while on site or traveling to and from a site unless such notice is hand-delivered to the Employee, or the Employee confirms that she has received delivery of the notice by another method.
Section 24 Independent Legal Advice
The Employee agrees that she has had, or has had the opportunity to obtain, independent legal advice in connection with the execution of this Agreement and has read this Agreement in its entirety, understands its contents and is signing this Agreement freely and voluntarily, without duress or undue influence from any party.
Section 25 Counterparts
This Agreement may be executed in counterparts and shall become operative when each party has executed and delivered at least one counterpart.
Signature page to follow.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year first above written.
IVANHOE ELECTRIC INC.
| By:/s/ Taylor Melvin | ||
| Taylor Melvin | ||
| Chief Executive Officer | ||
SIGNED by the Employee in the presence of:
| By:/s/ Cassandra Pulskamp Joseph | ||
| Cassandra Pulskamp Joseph | ||
Witness Signature
Denis Donovan
Witness Name - Print
Exhibit 31.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT
OF 2002
I, Taylor Melvin, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q for the Quarter ended March 31, 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. | |||||||
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | ||||
| 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. | |||||||
Date: May 15, 2023 | ||||||||
| By: | /s/ Taylor Melvin | |||||||
| Taylor Melvin | ||||||||
| Chief Executive Officer (principal executive officer) | ||||||||
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT
OF 2002
I, Jordan Neeser, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q for the Quarter ended March 31, 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. | |||||||
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | ||||
| 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. | |||||||
Date: May 15, 2023 | ||||||||
| By: | /s/ Jordan Neeser | |||||||
| Jordan Neeser | ||||||||
| Chief Financial Officer (principal financial officer) | ||||||||
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Ivanhoe Electric Inc. (the “Company”) for the quarterly period ended March 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Taylor Melvin, as Chief Executive Officer of the Company, hereby certifies, pursuant to and solely for the purpose of 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge and belief, that:
| (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. | |||||||
Date: May 15, 2023 | ||||||||
| By: | /s/ Taylor Melvin | |||||||
| Taylor Melvin | ||||||||
| Chief Executive Officer (principal executive officer) | ||||||||
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Ivanhoe Electric Inc. (the “Company”) for the quarterly period ended March 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Jordan Neeser, as Chief Financial Officer of the Company, hereby certifies, pursuant to and solely for the purpose of 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge and belief, that:
| (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. | |||||||
Date: May 15, 2023 | ||||||||
| By: | /s/ Jordan Neeser | |||||||
| Jordan Neeser | ||||||||
| Chief Financial Officer (principal financial officer) | ||||||||
