# NIOCORP DEVELOPMENTS LTD (NB) FY 2023 MD&A

Verbatim Item 7 Management's Discussion and Analysis from NIOCORP DEVELOPMENTS LTD's 10-K for fiscal year 2023.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1512228/000153949723001700/n2574_x163-10k.htm
Accession: 0001539497-23-001700
Filing date: 2023-10-06
Report date: 2023-06-30
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/NB/
All MD&A years: /company/NB/mda/
Previous year: /company/NB/mda/fy2022/ (FY 2022)
Next year: /company/NB/mda/fy2024/ (FY 2024)

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The
following Management’s Discussion and Analysis (“MD&A”) provides information that management believes is
relevant to an assessment and understanding of the consolidated financial condition and results of operations of NioCorp and subsidiaries.
This item should be read in conjunction with our consolidated financial statements and the notes thereto included in this Annual
Report on Form 10-K.

See
Item 1, “Business – Recent Corporate Events,” for a description of the Transactions.

Summary
of Consolidated Financial and Operating Performance

The
Company had no revenues from mining operations during the fiscal years presented below. Operating expenses incurred related primarily
to performing exploration and feasibility study related activities, as well as the activities necessary to support corporate and
shareholder duties.

[[GREPCENT_TABLE]]
[["","","","For the year ended June 30,"],["","","","2023","","2022","","","2021"],["","","","($000)"],["Operating expenses","","","$","37,410","","$","7,796","","$","4,092"],["Net loss attributable to the Company","","","","40,080","","","10,887","","","4,824"],["Net loss per share (basic and diluted)","","","","1.34","","","0.41","","","0.20"]]
[[/GREPCENT_TABLE]]

The net loss attributable
to the Company increased to $40.1 million for fiscal year 2023 from $10.9 million for fiscal year 2022. This increased net loss
in fiscal year 2023 as compared to fiscal year 2022 is primarily due to the recognition of Earnout Shares and warrant liabilities
associated with the GXII Transaction as well as an increase in legal and other professional fees.

The net loss attributable to the Company increased to $10.9 million for fiscal year 2022 from $4.8 million
for fiscal year 2021. This increased net loss in fiscal year 2022 as compared to fiscal year 2021 is primarily due to increased
exploration expenditures associated with process development costs and rare earth review costs, as well increased non-cash costs
of our fiscal year 2022 Option grants, which were fully vested and expensed on the grant dates, and increased loss on partial debt
extinguishment from debt conversions reported as interest expense.

Results
of Operations

The
Company had no revenues from mining operations during the fiscal years presented below. Operating expenses incurred related primarily
to costs incurred in connection with the Transactions, as well as performing exploration and feasibility study related activities,
and the activities necessary to support corporate and shareholder duties, as detailed in the following table.

47

[[GREPCENT_TABLE]]
[["","","For the year ended June 30,"],["","","2023","","","2022","","","2021"],["","","($000)"],["Operating expenses:"],["Employee related costs","","$","2,323","","","$","2,150","","","$","1,655"],["Professional fees","","","2,581","","","","684","","","","386"],["Exploration expenditures","","","5,348","","","","3,309","","","","1,056"],["Other operating expenses","","","27,158","","","","1,653","","","","995"],["Total operating expenses","","","37,410","","","","7,796","","","","4,092"],["Change in fair value of earnout shares liability","","","(2,674",")","","","-","","","","-"],["Change in fair value of warrant liabilities","","","1,414","","","","-","","","","-"],["Loss on debt extinguishment","","","1,922","","","","-","","","","163"],["Interest expense","","","2,336","","","","2,827","","","","1,543"],["Foreign exchange loss (gain)","","","216","","","","258","","","","(725",")"],["Other gains","","","(13",")","","","-","","","","(208",")"],["Change in financial instrument fair value","","","-","","","","-","","","","(32",")"],["Loss (gain) on equity securities","","","1","","","","6","","","","(9",")"],["Income tax benefit","","","(304",")","","","-","","","","-"],["Loss attributable to noncontrolling interest","","","(228",")","","","-","","","","-"],["Net loss attributable to the Company","","$","40,080","","","$","10,887","","","$","4,824"]]
[[/GREPCENT_TABLE]]

Fiscal
Year 2023 as Compared to Fiscal Year 2022

Significant
items affecting operating expenses are noted below:

Other
operating expenses include costs incurred in connection with the Transactions, including direct transaction expenses, and
the fair value of warrant and Earnout Shares liabilities assumed, as well as costs related to investor relations, general office
expenditures, equity offering and proxy expenditures, board-related expenditures, and other miscellaneous costs. These costs increased
in fiscal year 2023 as compared to fiscal year 2022 primarily due to the costs incurred in connection with the Transactions, which
closed on March 17, 2023. A summary of these costs is presented below:

[[GREPCENT_TABLE]]
[["","","Amount"],["","","($000)"],["Gross cash proceeds, net of transaction costs incurred by GXII","","$","2,168"],["Less:"],["Cash costs associated with the Transactions:"],["Net liabilities assumed","","","392"],["Yorkville Equity Facility Financing Agreement \u2013 cash costs","","","1,996"],["Transaction costs expensed","","","6,715"],["Non-cash costs associated with the Transactions:"],["Private Warrants assumed at fair value","","","2,987"],["Earnout Shares assumed at fair value","","","13,195"],["Yorkville Equity Facility Financing Agreement \u2013 shares issued","","","650"],["Total transaction related losses incurred","","$","23,767"]]
[[/GREPCENT_TABLE]]

In
addition, other operating expenses increased due to increased directors and officers insurance premiums associated with our US
stock exchange listing, as well as increased financial and investor relation services performed during 2023.

Exploration
expenditures increased in fiscal year 2023 as compared to fiscal year 2022, reflecting work performed in fiscal year 2023
to complete the development of the Demonstration Plant and the subsequent operation of the Demonstration Plant to verify process
improvement efforts and advance the technical and economic analyses on the potential addition of magnetic rare earth oxides to
NioCorp’s planned product suite. In addition, 2023 costs increased due to costs related to the completion and filing of
the Technical Report Summary

48

based on the Company’s 2022 Feasibility Study for the Elk Creek Project, which was filed with
the SEC on September 6, 2022.

Professional
fees increased in fiscal year 2023 as compared to fiscal year 2022, primarily due to additional accounting
and legal services related to our March 31, 2023 Form 10-Q SEC filings, as well as legal costs associated with corporate funding
initiatives.

Employee
related costs for fiscal year 2023 increased as compared to fiscal year 2022 primarily due to the impact of discretionary
bonus payouts totaling $0.2 million, partially offset by the impact of lower employee headcount at the end of fiscal year 2023
as compared to fiscal year 2022.

Other
significant items impacting the change in the Company’s net loss are noted below:

Change
in fair value of Earnout Shares liability represents the change in fair value related to the Earnout Shares between the Closing Date and the end
of fiscal year 2023, based on the results of Monte Carlo financial modeling.

Change
in fair value of warrant liability represents the change in fair value related to the additional Warrants (the “Contingent
Consent Warrants”) that the Company agreed to issue to Lind Global Asset Management III, LLC (“Lind”) upon certain
conditions in connection with the Waiver and Consent Agreement, dated September 25, 2022, between the Company and Lind (the “Lind
Consent”), as discussed in Note 9 to the consolidated financial statements included in Part II, Item 8 hereof, as well as
the change in the fair value of the Private Warrants based primarily on the impacts of a lower closing Common Share price, which
increases the probability of these Contingent Consent Warrants being issued under the Lind Consent terms.

Loss
on debt extinguishment represents the loss incurred under Accounting Standards Codification (“ASC”) Topic 470,
Debt, related to the convertible security issued to Lind (the “Lind III Convertible Security”) with a face value of
$11.7 million (representing $10.0 million in funding plus an implied 8.5% interest rate per annum for the term of the Lind III
Convertible Security) pursuant to the Convertible Security Funding Agreement, dated February 16, 2021, as amended by Amendment
#1 to the Convertible Security Funding Agreement, dated December 2, 2021, between the Company and Lind (as amended, the “Lind
III Agreement”), as discussed in Note 9 to the consolidated financial statements included in Part II, Item 8 hereof.

Interest
expense decreased in fiscal year 2023 as compared to fiscal year 2022 due to the impacts of conversions on the outstanding
balance of the Lind III Convertible Security during fiscal year 2022, as well as the impact of debt extinguishment accounting
as discussed in Note 9 to the consolidated financial statements included in Part II, Item 8 hereof, partially offset by Convertible
Debenture interest expense incurred in fiscal year 2023.

Loss
attributable to noncontrolling interest represents the portion of net loss in ECRC attributable to the Vested Shares, which
are not owned by the Company.

Fiscal
Year 2022 as Compared to Fiscal Year 2021

Significant
items affecting operating expenses are noted below:

Employee
related costs for fiscal year 2022 increased as compared to fiscal year 2021 primarily due to increased share-based compensation
costs which primarily reflected the impact of increased Common Share values on the fair value calculations in the Black-Scholes
model, as well as the number of Options granted.

Professional
fees increased in fiscal year 2022 as compared to fiscal year 2021, primarily due to additional legal services
related to SEC filings, including our shelf registration statement on Form S-3 filed in November 2021.

49

Exploration
expenditures increased in fiscal year 2022 as compared to fiscal year 2021 reflecting work performed in fiscal year 2022 to
advance the development of a demonstration-scale test plant to verify process improvement efforts as well as to potentially incorporate
REEs into our planned production. Fiscal year 2021 expenditures primarily related to the ongoing personnel costs, as well as ongoing
engineering and metallurgical projects and project advancement activities.

Other
operating expenses include investor relations, general office expenditures, equity offering and proxy expenditures, board-related
expenditures, and other miscellaneous costs. These costs increased in fiscal year 2022 as compared to fiscal year 2021 primarily
due to increased financial advisory fees and investor relations fees associated with our ongoing financing efforts. In addition,
share-based compensation for directors and other advisors increased in fiscal year 2022 as compared to fiscal year 2021 due to
increased share-based compensation costs, which primarily reflected the impact of increased Common Share values in the Black Scholes
model. Options issued in both periods were fully vested upon issuance and expensed on the grant date.

Other
significant items impacting the change in the Company’s net loss are noted below:

Other
income for fiscal year 2021 represents the one-time forgiveness of the Company’s U.S. Small Business Administration
Loan, which occurred on November 18, 2020.

Loss
on extinguishment for fiscal year 2021 represents the one-time loss incurred in connection with the December 18, 2020, conversion
of a convertible note in the principal amount of approximately $1.9 million issued by the Company to Nordmin pursuant to a convertible
note and warrant subscription agreement, dated as of December 18, 2020, between NioCorp and Nordmin (the “Nordmin Note”).

Foreign
exchange (gain) loss is primarily due to changes in the U.S. dollar against the Canadian dollar rate as applied to U.S. dollar-denominated
debt instruments, which are carried on the Canadian parent company books, and the fiscal year 2022 loss reflected the impacts
of a strengthened U.S. dollar to Canadian dollar, whereas the fiscal year 2021 gain primarily reflects the impact of a weakened
U.S. dollar.

Interest
expense increased in fiscal year 2022 as compared to fiscal year 2021 primarily due to the accretion of the Nordmin Note,
which was issued in December 2020, as well as accretion of the Lind Convertible Security, which was issued in February 2021.

Liquidity
and Capital Resources

We
have no revenue generating operations from which we can internally generate funds. To date, our ongoing operations have been financed
by the sale of our equity securities by way of private placements, convertible securities issuances, the exercise of incentive
Options and Warrants, and related party loans. With respect to currently outstanding Options and Warrants, we believe that exercise
of these instruments, and cash proceeds from such exercises, will not occur unless and until the market price for our Common Shares
equals or exceeds the related exercise price of each instrument.

In
connection with the Closing of the Transactions, the Company received net cash proceeds of $8.3 million, as follows:

[[GREPCENT_TABLE]]
[["Description","","Amount"],["","","($000)"],["Net cash received from GXII trust account, after payment of direct and incremental transaction costs incurred by GXII","","$","2,168"],["Net proceeds from the Yorkville Convertible Debt Financing Agreement","","","14,857"],["Net cash costs incurred in connection with Yorkville Equity Facility Financing Agreement","","","(1,996)"],["NioCorp direct and incremental transaction costs","","","(6,715)"],["Net proceeds from Transactions","","$","8,314"]]
[[/GREPCENT_TABLE]]

50

The
Transactions delivered to NioCorp several important benefits, including a ready pathway to an up-listing to the Nasdaq, which
is expected to allow additional institutional firms to invest in the Company for the first time. Further, we believe it has given
NioCorp and the Elk Creek Project a much higher profile among institutional investors evaluating projects in the critical materials
space.

The
Yorkville Convertible Debt Financing has provided, and the Yorkville Equity Facility Financing is expected to provide, near-term
and longer-term access to capital. The ability of the Company to draw down on the Yorkville Equity Facility Financing Agreement,
at its discretion, is subject to certain limitations and the satisfaction of certain conditions. When available, the Yorkville
Equity Facility Financing Agreement provides an opportunity to actively manage the cash needs of the Company more closely. Historically,
cash has generally been available to the Company through private placements of equity for which the timing did not always coincide
with the Company’s cash needs. The Company may utilize the Yorkville Equity Facility Financing Agreement to potentially
generate funds at a time when they are in need. Alternatively, the Company can also utilize the Yorkville Equity Facility Financing
Agreement for opportunistic share sales.

As
of June 30, 2023, the Company had cash of $2.3 million and working capital of $0.2 million, compared to cash of $5.3 million and
working capital of $0.6 million on June 30, 2022. On September 1, 2023, the Company closed a non-brokered private placement (the
“September 2023 Private Placement”) of units of the Company (the “September 2023 Units”). A total of 250,000
September 2023 Units were issued at a price per September 2023 Unit of $4.00, for total gross proceeds to the Company of $1.0 million. Each September
2023 Unit consists of one Common Share and one Common Share purchase warrant (“September 2023 Warrant”). Each September
2023 Warrant entitles the holder to acquire one Common Share at a price of $4.60 at any time prior to September 1, 2025. In addition,
On September 12 and September 15, 2023, the Company issued 70,000 and 75,000 Common Shares, respectively, under the Yorkville
Equity Facility Financing Agreement in exchange for $0.5 million in gross cash proceeds. NioCorp intends to use the net proceeds
from these September financing transactions for working capital and general corporate purposes, including to advance its efforts
to launch construction of the Elk Creek Project and move it to commercial operation.

We
expect that the Company will operate at a loss for the foreseeable future. The Company’s current planned cash needs are
approximately $11.8 million until June 30, 2024.

In
addition to outstanding accounts payable and short-term liabilities, our average monthly planned expenditures through June 30,
2024 are expected to be approximately $685,000 per month where approximately $390,000 is for corporate overhead and estimated
costs related to securing financing necessary for advancement of the Elk Creek Project. Approximately $295,000 per month is planned
for expenditures relating to the advancement of the Elk Creek Project by NioCorp’s majority owned subsidiary, ECRC. The
Company’s ability to continue operations and fund our current work plan is dependent on management’s ability to secure
additional financing.

The
Company anticipates that it does not have sufficient cash on hand to continue to fund basic operations for the next twelve months,
and additional funds totaling $8.0 million to $9.0 million, net of funds raised from the September financing transactions discussed
above, are likely to be necessary to continue advancing the project in the areas of financing, permitting, and detailed engineering.
While the Yorkville Equity Facility Financing Agreement may provide the Company with access to additional capital, the Company
may require additional capital to meet its cash need. Management is actively pursuing such additional sources of debt and equity
financing, and while it has been successful in doing so in the past, there can be no assurance it will be able to do so in the
future.

Elk
Creek property and lease commitments are $20,000 through June 30, 2024. To maintain our currently held properties and fund our
currently anticipated general and administrative costs and planned exploration and development activities at the Elk Creek Project
for the fiscal year ending June 30, 2024, the Company will likely require additional financing during the current fiscal year.
Should such financing not be available in that timeframe, we will be required to reduce our activities and will not be able to
carry out all our presently planned activities at the Elk Creek Project.

On
June 6, 2023, the Company announced that it had submitted an application to the Export-Import Bank of the United States (“EXIM”)
for debt financing (the “EXIM Financing”) to fund the project costs for the Elk Creek Project, under EXIM’s
“Make More in America” initiative. The EXIM Financing is subject to, among other matters, the

51

satisfactory completion
of due diligence, the negotiation and settlement of final terms, and the negotiation of definitive documentation. There can be
no assurance that the EXIM Financing will be completed on the terms described herein or at all.

Except
for potential funding under the Yorkville Equity Facility Financing, discussed above, and the potential exercise of Options and
Warrants, we currently have no further funding commitments or arrangements for additional financing at this time, and there is
no assurance that we will be able to obtain any such additional financing on acceptable terms, if at all. Pursuant to the Exchange
Agreement, NioCorp is restricted from issuing equity or equity-linked securities (other than Common Shares) or any preferred equity
or non-voting equity if such issuance would adversely impact the rights of the holders of the shares of Class B common stock of
ECRC, without the consent of the holders of a majority of the shares of Class B common stock of ECRC. The Yorkville Convertible
Debt Financing Agreement also contains certain covenants that, among other things, limit NioCorp’s ability to use the proceeds
from the Yorkville Convertible Debt Financing to repay related party debt or to enter into any variable rate transaction, including
issuances of equity or debt securities that are convertible into Common Shares at variable rates and any equity line of credit,
ATM agreement or other continuous offering of Common Shares, other than with Yorkville, subject to certain exceptions. Notwithstanding
the restrictions set forth in the Exchange Agreement and the Yorkville Convertible Debt Financing Agreement, there is significant
uncertainty that we would be able to secure any additional financing in the current equity or debt markets. The quantity of funds
to be raised and the terms of any proposed equity or debt financing that may be undertaken will be negotiated by management as
opportunities to raise funds arise. Management may to pursue funding sources of both debt and equity financing, including but
not limited to the issuance of equity securities in the form of Common Shares, Warrants, subscription receipts, or any combination
thereof in units of the Company pursuant to private placements to accredited investors or pursuant to public offerings in the
form of underwritten/brokered offerings, registered direct offerings, or other forms of equity financing and public or private
issuances of debt securities including secured and unsecured convertible debt instruments or secured debt project financing. Management
does not currently know the terms pursuant to which such financings may be completed in the future, but any such financings will
be negotiated at arm’s-length. Future financings involving the issuance of equity securities or derivatives thereof will
likely be completed at a discount to the then-current market price of the Company’s securities and will likely be dilutive
to current shareholders. In addition, we could raise funds through the sale of interests in our mineral properties, although current
market conditions and other recent worldwide events have substantially reduced the number of potential buyers/acquirers of any
such interests. However, we cannot provide any assurances that we will be able to be successful in raising such funds.

Based
on the conditions described within, management has concluded and the audit opinion and notes that accompany our consolidated financial statements
for the year ended June 30, 2023, disclose that substantial doubt exists as to our ability to continue in business. The consolidated financial
statements included in this Annual Report on Form 10-K have been prepared under the assumption that we will continue as a going
concern. As defined under S-K 1300, we are a development stage issuer, and we have incurred losses since our inception. We may
not have sufficient cash, including option and warrant exercises subsequent to June 30, 2023, to fund normal operations and meet
debt obligations for the next twelve months without deferring payment on certain current liabilities and raising additional funds.
Recent worldwide events have created general global economic uncertainty as well as uncertainty in capital markets, supply chain
disruptions, increased interest rates and inflation, and the potential for geographic recessions. During fiscal year 2023, these
events continued to create uncertainty with respect to overall project funding and timelines. We believe that the going concern
uncertainty cannot be alleviated with confidence until the Company has entered into a business climate where funding of its planned
ongoing operating activities is secured. Therefore, these factors raise substantial doubt as to our ability to continue as a going
concern.

We
have no exposure to any asset-backed commercial paper. Other than cash held by our subsidiaries for their immediate operating
needs in Colorado and Nebraska, all of our cash reserves are on deposit with major U.S. and Canadian chartered banks. We do not
believe that the credit, liquidity, or market risks with respect thereto have increased as a result of the current market conditions.
However, in order to achieve greater security for the preservation of our capital, we have, of necessity, been required to accept
lower rates of interest, which has also lowered our potential interest income.

52

Operating
Activities

During
the year ended June 30, 2023, the Company’s operating activities consumed $17.3 million of cash (2022: $6.2 million and
2021: $4.7 million). The cash used in operating activities for fiscal year 2023 reflects the Company’s funding of losses
of $40.1 million, the net fair value losses related to the Private Warrants and the Earnout Shares liabilities,
share-based compensation, and other non-cash transactions. Overall, operational outflows during fiscal year 2023 increased from
the corresponding period of 2022 due to cash expenses related to the Transactions and an increase in exploration-related spending
at the Elk Creek Project. Overall, fiscal year 2023 operational outflows were higher than fiscal year 2022 due primarily to increased
exploration expenditures. Going forward, the Company’s working capital requirements are expected to increase substantially
in connection with the development of the Elk Creek Project.

Investing
Activities

The
Company had minimal investing activities during the years ended June 30, 2023 and 2022, respectively.

Financing
Activities

Net
cash provided by financing activities was $14.6 million in fiscal year 2023 (2022: $4.3 million and 2021: $18.1 million). This
increase in financing inflows primarily reflects the timing of cash inflows from the financing transactions disclosed below.

The
following is a discussion of significant financing transactions for fiscal year 2023:

[[GREPCENT_TABLE]]
[["","\u25cf","On February 28, 2023, the non-revolving credit facility agreement, dated January 16, 2017, as amended, with Mark Smith, our Chief Executive Officer, President, and Executive Chairman (the \u201cSmith Credit Agreement\u201d) was amended to increase the borrowing limit to $4.0 million from the previous limit of $3.5 million. The Company subsequently drew down $1.13 million under the Smith Credit Agreement. On March 22, 2023, the Company repaid Mr. Smith $2.0 million, representing $159,000 of interest and $1.84 million of principal borrowed under the Smith Credit Agreement. This repayment was made out of funds transferred to the Company from the GXII trust account on the Closing Date. Subsequently, on May 31, 2023, the Company repaid Mr. Smith $1.31 million, representing $24,000 of interest and the remaining principal balance outstanding of $1.29 million."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","In connection with the GXII Transaction, on January 26, 2023, NioCorp and Yorkville entered into the Yorkville Convertible Debt Financing Agreement, which was subsequently amended on February 24, 2023."]]
[[/GREPCENT_TABLE]]

Pursuant
to the Yorkville Convertible Debt Financing Agreement, at the Closing, Yorkville advanced a total amount of $15.36 million to
NioCorp in consideration of the issuance by NioCorp to Yorkville of (i) $16.0 million aggregate principal amount of Convertible
Debentures and (ii) the Financing Warrants, which are exercisable for up to 1,789,267 Common Shares for cash or, if at any time
there is no effective registration statement registering, or no current prospectus available for, the resale of the underlying
Common Shares, on a cashless basis, at the option of the holder, at a price per Common Share of approximately $8.9422, subject
to adjustment to give effect to any stock dividend, stock split, reverse stock split or similar transaction.

Each
Convertible Debenture issued under the Yorkville Convertible Debt Financing Agreement is an unsecured obligation of NioCorp, matures
on September 17, 2024, which maturity may be extended for one six-month period in certain circumstances at the option of NioCorp,
and incurs a simple interest rate obligation of 5.0% per annum (which will increase to 15.0% per annum upon the occurrence of
an event of default). The outstanding principal amount of, accrued and unpaid interest, if any, on, and premium, if any, on the
Convertible Debentures must be paid by NioCorp in cash when the same becomes due and payable under the terms of the Convertible
Debentures at their stated maturity, upon their redemption or otherwise.

Subject
to certain limitations contained within the Yorkville Convertible Debt Financing Agreement and the Convertible Debentures, including
those as described below, holders of the Convertible Debentures will be entitled to convert the principal amount of, and accrued
and unpaid interest, if any, on each Convertible

53

Debenture, in whole or in part, from time to time over their term, into a number
of Common Shares equal to the quotient of the principal amount and accrued and unpaid interest, if any, being converted divided
by the Conversion Price. The “Conversion Price” means, as of any Conversion Date (as defined below) or other date
of determination, the greater of (i) 90% of the average of the daily U.S. dollar volume-weighted average price of the Common Shares
on the principal U.S. market for the Common Shares as reported by Bloomberg Financial Markets during the five consecutive trading
days immediately preceding the date on which the holder exercises its conversion right in accordance with the requirements of
the Yorkville Convertible Debt Financing Agreement (the “Conversion Date”) or other date of determination, but not
lower than the Floor Price (as defined below), and (ii) the five-day volume-weighted average price of the Common Shares on the
TSX (or on the principal U.S. market if the majority of the trading volume and value of the Common Shares occurred on Nasdaq during
the relevant period) for the five consecutive trading days immediately prior to the Conversion Date or other date of determination
less the maximum applicable discount allowed by the TSX. The “Floor Price” means a price of $2.1435 per share, which
is equal to the lesser of (a) 30% of the average of the daily volume-weighted average price of the Common Shares on the principal
U.S. market for the Common Shares as reported by Bloomberg Financial Markets during the five consecutive trading days immediately
preceding the Debenture Closing and (b) 30% of the average of the volume-weighted average price of the Common Shares on the principal
U.S. market for the Common Shares as reported by Bloomberg Financial Markets during the five consecutive trading days immediately
following the Debenture Closing, subject to certain adjustments to give effect to any stock dividend, stock split, reverse stock
split, recapitalization or similar event.

The
terms of the Convertible Debentures restrict the number of Convertible Debentures that may be converted during each calendar month
by Yorkville at a Conversion Price below a fixed price equal to approximately $8.9422 (i.e., the quotient of $10.00 divided by
1.11829212 (being the number of Common Shares that were exchanged for each share of GXII at the Closing, after giving effect to
the Reverse Stock Split)), subject to adjustment to give effect to any stock dividend, stock split, reverse stock split, recapitalization
or similar event. The Convertible Debentures are subject to customary anti-dilution adjustments.

The
terms of the Convertible Debentures restrict the conversion of Convertible Debentures by Yorkville if such a conversion would
cause Yorkville to exceed certain beneficial ownership thresholds in NioCorp or such a conversion would cause the aggregate number
of Common Shares issued pursuant to the Yorkville Convertible Debt Financing Agreement to exceed the thresholds for issuance of
Common Shares under the rules of the TSX and Nasdaq, unless prior shareholder approval is obtained.

Pursuant
to the terms of the Convertible Debentures, following certain trigger events, and until a subsequent cure event, NioCorp will
be required to redeem $1.125 million aggregate principal amount of Convertible Debentures (the “Triggered Principal Amount”)
each month by making cash payments to the Investors, on a pro rata basis, in an amount equal to the Triggered Principal Amount,
plus accrued and unpaid interest thereon, if any, plus a redemption premium of 7% of the Triggered Principal Amount. Such monthly
prepayments under the terms of the Convertible Debentures are triggered (i) at the time when NioCorp has issued 95% of the total
amount of Common Shares pursuant to the Yorkville Convertible Debt Financing that it may issue under applicable TSX and Nasdaq
rules or (ii) when NioCorp has delayed or suspended the effectiveness or use of the Convertible Debt Financing Registration Statement
for more than 20 consecutive calendar days, and such monthly prepayment obligations will continue until, with respect to (i) above,
shareholder approval is obtained or, with respect to (ii) above, the Investors may once again resell Common Shares under the Convertible
Debt Financing Registration Statement, respectively.

[[GREPCENT_TABLE]]
[["","\u25cf","In connection with the GXII Transaction, on January 26, 2023, the Company and Yorkville entered into the Yorkville Equity Facility Financing Agreement."]]
[[/GREPCENT_TABLE]]

Pursuant
to the Yorkville Equity Facility Financing Agreement, Yorkville has committed to purchase up to $65.0 million of our Common Shares
(the “Commitment Amount”), at our direction from time to time for a period commencing upon the Closing Date and ending
on the earliest of (i) the first day of the month next following the 36-month anniversary of the Closing, (ii) the date on which
Yorkville shall have made payment

54

of the full Commitment Amount and (iii) the date that the Yorkville Equity Facility Financing
Agreement otherwise terminates in accordance with its terms (the “Commitment Period”), subject to certain limitations
and the satisfaction of the conditions in the Yorkville Equity Facility Financing Agreement. Pursuant to the terms of the Yorkville
Equity Facility Financing Agreement, we issued 81,213 of our Common Shares (the “Commitment Shares”) to Yorkville
as consideration for its irrevocable commitment to purchase Common Shares under the Yorkville Equity Facility Financing Agreement.
Yorkville has since resold all of the Commitment Shares. On June 9, 2023, we issued and sold 100,000 Common Shares to Yorkville
under the Yorkville Equity Facility Financing Agreement. Additionally, we are required to pay Yorkville an aggregate fee of $1,500,000
in cash (the “Cash Fee”), including $500,000 that we paid on the Closing Date and an additional $250,000 we have paid
as of June 30, 2023. We will pay the remaining $750,000 balance in installments over a 12-month period following the Closing Date,
provided that, we will have the right to prepay without penalty all or part of the remaining installments of the Cash Fee at any
time. The Common Shares that may be sold pursuant to the Yorkville Equity Facility Financing Agreement would be purchased by Yorkville
at a purchase price equal to 97% of the daily volume-weighted average price of the Common Shares on Nasdaq or such other principal
U.S. market for the Common Shares if the Common Shares are ever listed or traded on the New York Stock Exchange or the NYSE American
as reported by Bloomberg Financial Markets (or, if not available, a similar service provider of national recognized standing)
during the applicable pricing period, which is a period during a single trading day or a period of three consecutive trading days,
at the Company’s option and subject to certain restrictions, in each case, defined based on when an Advance Notice (as defined
in the Yorkville Equity Facility Financing Agreement) is submitted, subject to certain limitations.

As
of June 30, 2023, 100,000 Common Shares, representing $488,080 in net proceeds, had been issued under the Yorkville Equity Facility
Financing Agreement.

[[GREPCENT_TABLE]]
[["","\u25cf","On April 28, 2023, the Company issued and sold 314,465 Common Shares in a registered direct offering at a price of $6.36 per share. Net proceeds to the Company from the offering were approximately $1.8 million. NioCorp intends to use the net proceeds from the offering for working capital and general corporate purposes, including to advance its efforts to launch construction of the Elk Creek Project and move it to commercial operation."]]
[[/GREPCENT_TABLE]]

The
following is a discussion of significant financing transactions for fiscal year 2022:

[[GREPCENT_TABLE]]
[["","\u25cf","On June 30, 2022, the Company closed a non-brokered private placement (the \u201cJune 2022 Private Placement\u201d) of units (the \u201cJune 2022 Units\u201d) of the Company. A total of 4,981,035 June 2022 Units were issued at a price per June 2022 Unit of C$0.96, for total gross proceeds to the Company of approximately C$4.8 million. Each June 2022 Unit consists of one Common Share and one common share purchase warrant (\u201cJune 2022 Warrant\u201d). Each June 2022 Warrant entitles the holder to acquire one Common Share at a price of C$1.10 at any time prior to July 1, 2024. Proceeds of the June 2022 Private Placement will be used for continued advancement of the Company\u2019s Elk Creek Critical Minerals Project and for working capital and general corporate purposes. The Company paid cash commissions of C$62,000 and 65,100 warrants (the \u201cFinder Warrants\u201d), having the same terms as the June 2022 Warrants, to finders outside of the United States. The Finder Warrants were valued at C$18,000 using a risk-free rate of 3.2%, expected volatility of 64% and expected life of two years."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","On July 23, 2021, the Company repaid $358,000 to Mr. Smith, representing a partial principal repayment of $318,000 on the Smith Credit Agreement plus accrued interest."]]
[[/GREPCENT_TABLE]]

Cash
Flow Considerations

The
Company has historically relied upon debt and equity financings to finance its activities. Subject to the restrictions set forth
in the Yorkville Convertible Debt Financing Agreement, the Company may pursue additional debt and/or equity financing in the medium
term; however, there can be no assurance the Company will be able to obtain any required financing in the future on acceptable
terms.

55

The
Company has limited financial resources compared to its proposed expenditures, no source of operating income, and no assurance
that additional funding will be available to it for current or future projects, although the Company has been successful in the
past in financing its activities through the sale of equity securities.

The
ability of the Company to arrange additional financing in the future will depend, in part, on the prevailing capital market conditions,
and its success in developing the Elk Creek Project. Any quoted market for the Common Shares may be subject to market trends generally,
notwithstanding any potential success of the Company in creating revenue, cash flows, or earnings, and any depression of the trading
price of the Common Shares could impact its ability to obtain equity financing on acceptable terms.

Historically,
the Company has used net proceeds from issuances of Common Shares to provide sufficient funds to meet its near-term exploration
and development plans and other contractual obligations when due. However, development and construction of the Elk Creek Project
will require substantial additional capital resources. This includes near-term funding and, ultimately, funding for Elk Creek
Project construction and other costs. See “Liquidity and Capital Resources” above, for the Company’s
discussion of arrangements related to possible future financings.

Debt
Covenants

The
Convertible Debentures contain events of default customary for instruments of their type (with customary grace periods, as applicable)
and provide that, upon the occurrence of an event of default arising from certain events of bankruptcy or insolvency with respect
to NioCorp, all outstanding Convertible Debentures will become due and payable immediately without further action or notice. If
any other type of event of default occurs and is continuing, then any holder may declare all of its Convertible Debentures to
be due and payable immediately. The Company obtained a waiver from Yorkville with respect to any acceleration rights it may have
under the Convertible Debentures in connection with the restatements of the Company’s financial statements for the periods
ended September 30, 2022, and December 31, 2022, and the delay in filing the Company’s Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 2023. The Yorkville Convertible Debt Financing Agreement also contains certain covenants
that, among other things, limit NioCorp’s ability to use the proceeds from the Yorkville Convertible Debt Financing to repay
related party debt or to enter into any variable rate transaction other than with Yorkville, subject to certain exceptions. The
Company was in compliance with these covenants as of June 30, 2023.

Environmental

Our
mining and exploration activities are subject to various federal and state laws and regulations governing the protection of the
environment. We have made, and expect to make in the future, expenditures to comply with such laws and regulations, but cannot
predict the full amount of such future expenditures. As of June 30, 2023 and 2022, we had accrued $48,000 and $48,000, respectively,
related to estimated environmental obligations.

Forward-Looking
Statements

The
foregoing discussion and analysis, as well as certain information contained elsewhere in this Annual Report on Form 10-K, contain
“forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act, and are intended to be covered by the safe harbor created thereby. See the discussion in “Forward-Looking Statements”
in Item 1., “Business.”

Accounting
Developments

For
a discussion of Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements, see Note 3 to the consolidated
financial statements included in this Annual Report on Form 10-K.

Critical
Accounting Estimates and Recent Accounting Pronouncements

Our
significant accounting policies are described in Note 3 to the consolidated financial statements included in this Annual Report
on Form 10-K. As described in Note 3, we are required to make estimates and assumptions that affect the reported amounts and related
disclosures of assets, liabilities, revenue, and expenses. Our estimates are based on our experience and our interpretation of
economic, political, regulatory, and other factors that affect our

56

business prospects. Many of the inputs into our estimation
process are subjective and are subject to uncertainty over time and therefore, actual results may differ significantly from our
estimates. Note 3 also discloses recent accounting pronouncements applicable to the Company.

We believe that our most critical accounting estimates are related to the carrying value of our long term
assets; accounting for income taxes and the valuation of deferred tax assets; and the valuation of warrants and earnout shares,
as they require us to make assumptions that are highly uncertain at the time the accounting estimates are made and changes in them
are reasonably likely to occur from period to period. Management has discussed the development and selection of these critical
accounting estimates with the Audit Committee of our board of directors, and the Audit Committee has reviewed the disclosures presented
below. In addition, there are other items within our consolidated financial statements that require estimation, but are not deemed to be critical.
However, changes in estimates used in these and other items could have a material impact on our consolidated financial statements.

Carrying
Value of Long-Lived Assets

The
recoverability of the carrying values of mineral properties is dependent upon economic reserves being discovered or developed
on the properties, permitting, financing, start-up, and commercial production from, or the sale/lease of, or other strategic transactions
related to these properties. Development and/or start-up of a project will depend on, among other things, management’s ability
to raise sufficient capital for these purposes. We assess the carrying cost of our mineral properties for impairment whenever
information or circumstances indicate the potential for impairment. Key inputs include events and circumstances such as our inability
to obtain all the necessary permits, changes in the legal status of our mineral properties, government actions, the results of
exploration activities and technical evaluations and changes in economic conditions, including the price of commodities or input
prices. Many of these inputs are subjective and are subject to uncertainty over time. Such evaluations compare estimated future
net cash flows with our carrying costs and future obligations on an undiscounted basis. If it is determined that the estimated
future undiscounted cash flows are less than the carrying value of the property, an impairment loss will be recorded, measured
by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Where estimates of future net cash
flows are not determinable and where other conditions indicate the potential for impairment, management uses available market
information and/or third-party valuation experts to assess if the carrying value can be recovered and to estimate fair value.

We
review and evaluate our long-lived assets, other than mineral properties, for impairment when events or changes in circumstances
indicate that the related carrying amounts may not be recoverable. An impairment loss is measured and recorded based on the estimated
fair value of the long-lived assets being tested for impairment and their carrying amounts.

Income
Taxes

We have assets, hold interests, and conduct activities in the U.S. and Canada and are subject to their
tax regimes. Tax laws are complex and continue to evolve. While we have a history of losses, our assumptions made in tax returns
are subject to review and interpretation by taxing authorities and could be modified. Management
judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities, and any valuation
allowance recorded against our deferred tax assets. We consider factors such as the cumulative income or loss in recent years;
reversal of deferred tax liabilities; projected future taxable income exclusive of temporary differences; the character of the
income tax asset, including income tax positions; tax planning strategies and the period over which we expect the deferred tax
assets to be recovered in the determination of the valuation allowance. In the event that actual results differ from these estimates
or we adjust our estimates in the future, we may need to adjust our valuation allowance, which could materially impact our financial
position and results of operations.

57

Earnout
Shares and Private Warrants

The
fair values of our Earnout Shares liability and Private Warrants liability were determined using various significant unobservable
inputs, including a discount rate and our best estimate of expected volatility and expected holding periods. Changes in the estimated
fair values of these liabilities may have material impacts on our results of operations in any given period, as any increases
in these liabilities have a corresponding negative impact on our U.S. GAAP results of operations. See Note 10 and 11c to our consolidated
financial statements included in this Annual Report on Form 10-K for additional details.

Other

The
Company has one class of shares, being Common Shares. A summary of outstanding shares, share options, warrants, and convertible
debt option as of October 6, 2023, is set out below, on a fully diluted basis.

[[GREPCENT_TABLE]]
[["","Common Shares Outstanding (fully diluted)"],["Common Shares","32,913,419"],["Vested Shares1","4,565,808"],["Stock options2","1,319,000"],["Warrants3","19,066,304"],["Convertible Debt4","2,480,900"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","1","Each exchangeable into one Common Share at any time, and from time to time, until the tenth anniversary of the Closing Date."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","2","Each exercisable into one Common Share."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","3","Includes 15,666,626 NioCorp Assumed Warrants that are each exercisable into 1.11829212 Common Shares, and 3,399,678 Warrants that are each exercisable into one Common Share."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","4","Represents Common Shares issuable on conversion of Convertible Debentures with an aggregate outstanding principal and accrued interest balance of $8.16 million as of October 6, 2023, assuming a market price per Common Share of $3.66 on that date."]]
[[/GREPCENT_TABLE]]

58