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To be clear. Mark is selling most of his shares.
Someone point out my error:
https://www.sec.gov/Archives/edgar/data/1512228/000153949723000670/n2574_x119-s3resale.htm#a_009
of the Selling Shareholders:
Mark Smith
Number of Common Shares Beneficially Owned Prior to Offering:
2,226,795
Number of Common Shares Beneficially Owned After Offering:
500,251
Note 19:
Mark A. Smith has sole voting and investment power over the securities he beneficially owns. Beneficial ownership includes (a) 2,041,795 Common Shares that are issued and outstanding, (b) 50,000 Common Shares issuable upon exercise of options, exercisable at C$7.50 per Common Share, expiring December 14, 2023, (c) 65,000 Common Shares issuable upon exercise of options, exercisable at C$13.60 per Common Share, expiring December 17, 2024, and (d) 70,000 Common Shares issuable upon exercise of the options, exercisable at C$9.52 per Common Share, expiring March 27, 2026, in each case, held by Mr. Smith. Mr. Smith is offering pursuant to this prospectus 1,726,544 Common Shares that are issued and outstanding. Mr. Smith is the President, Chief Executive Officer and Chairman of the Board of Directors of NioCorp. The address for Mr. Smith is c/o NioCorp Developments Ltd., 7000 Yosemite Street, Suite 115, Centennial, CO 80112.
28,506,605 shares of gxii were redeemed at the merger.
That left 1,493,395 or 5% that remained.
Of the 5% that remained, who were they?
The answer:
They were called anchor investors.
The anchor investors purchased 1.8 million shares of gxii class A for a value of ($18,000,000) during the ipo
The anchor investors agreed not to redeem before the merger and they would receive a percentage of the free sponsor shares/warrants
https://www.sec.gov/Archives/edgar/data/1826669/000121390021016420/f424b40321_gxacquisition2.htm
the allocation of founder shares to such anchor investor will be reduced proportionately based on the percentage of such anchor investor’s initial share allocation the anchor investor does not own, has redeemed or fails to vote in favor of our initial business combination.
Mark A. Smith has sole voting and investment power over the securities he beneficially owns. Beneficial ownership includes (a) 2,041,795 Common Shares that are issued and outstanding, (b) 50,000 Common Shares issuable upon exercise of options, exercisable at C$7.50 per Common Share, expiring December 14, 2023, (c) 65,000 Common Shares issuable upon exercise of options, exercisable at C$13.60 per Common Share, expiring December 17, 2024, and (d) 70,000 Common Shares issuable upon exercise of the options, exercisable at C$9.52 per Common Share, expiring March 27, 2026, in each case, held by Mr. Smith. Mr. Smith is offering pursuant to this prospectus 1,726,544 Common Shares that are issued and outstanding. Mr. Smith is the President, Chief Executive Officer and Chairman of the Board of Directors of NioCorp. The address for Mr. Smith is c/o NioCorp Developments Ltd., 7000 Yosemite Street, Suite 115, Centennial, CO 80112.
This is false information. People need to look at the filings.
Clearly the sponsors were not able to redeem their shares.
"The Sponsor and the Company’s directors, executive officers and their respective affiliates are not entitled to redeem their GX Founder Shares."
https://www.sec.gov/Archives/edgar/data/1826669/000121390023009754/def14a0223_gxacq2.htm
Thanks for sharing Walterc!
Gxii changed its name to Elk Creek on Mar 17 as a result of the merger. It was a shell company on the nasdaq. We have taken that over.
Gxii class B shares, or the sponsor, had about 7.5 million shares, that can convert to class A on 1 for 1 basis. They only paid $25,000 for all of them. That is why the filing shows cost .003
Gxii sponsors new name is Elk Creek Resources, a subsidiary of NB; their shares don't show yet. Very sneaky to say the least.
I posted niocorp filing. .003 cost for the sponsors. This has been known since the deal was announced.
Their shares cost .003
https://www.sec.gov/Archives/edgar/data/1512228/000153949723000670/n2574_x119-s3resale.htm
For example, the shares of Class B common stock of GXII that were exchanged for shares of ECRC Class B common stock in connection with the Closing were initially purchased by the Sponsor at a price of $0.003 per share. Based on the last reported sale price of the Common Shares on The Nasdaq Global Market on April 11, 2023, as disclosed below, the Selling Shareholders who beneficially own the ECRC Class B common stock would experience a potential profit of approximately $6.82 per share, or approximately $31,125,113 in the aggregate, assuming they exchange all of their Vested Shares for Common Shares and sold them pursuant to this prospectus.
Another question is timing. Spacs were hot for a while 2020-21
Mark was way late. MP SPAC was better timed.
Last March April the markets began to tank. Making an offer for Twitter in March really looked bad in a few months.
I think you have the wrong idea. All spacs are risky. Last year the average redemption rate for all spacs was 85-90%. By the end of the year closer to 95%
All spac sponsors usually get about 20% of the deal for their $25k.
The question is why do it in light of all the negatives regarding spacs.
This is a leadership decision that was filled with wishful thinking.
Page 6 of investor presentation on the Niocorp website:
"NioCorp working with 3 US federal agencies on potential funding"
https://www.niocorp.com/wp-content/uploads/NIOCORP_INVESTOR_DECK_2023.pdf
Now with Yorkville money I am curious to see what we can accomplish before EXIM. Slide 26 from investor presentation shows the next steps:
1. Completion of Demonstration Plant testing of optimized flow sheet and rare earth recovery rates
2. Issuance of updated Feasibility Study incorporating rare earth production plans and expanded economics
3. Exercise option-to purchase agreements for additional land purchases
4. Execute final contracts with major EPC companies already chosen for mining and surface construction
5. Conduct detailed engineering necessary for launch of construction
6. Site preparation & development of infrastructure
7. Begin sinking shafts into the mine
8. Additional offtake agreements
9. Complete project financing
10. Launch of construction with expected completion in 3 years
11. Plant commissioning
12. Full-scale production
It has been mentioned by Boilermaker1 and others that a loan or an application would not be likely until the revised FS is publicly available for review. You wouldn't turn in an obsolete application. The fact is we are still waiting a month or 2 for FS if we are lucky and then 45 days for FS, then 6 to 9 months - so Q1 2024 seems probable.
Fizz bam boom.
If you watch CNBC they will tell you "it's going to go up, but it may go down."
I predict great ree results in about 2-4 weeks (no pun intended) and EXIM approval in Q1, then it's off to the races.
Unfortunately we are at outcome number two:
Sorry Walterc but that is wrong. There are different possible outcomes when dealing with a spac.
One outcome, the one Mark wants, is there will be few redemptions by gxii and the combination completes as planned. If that happens those of us who currently own 100% of niocorp will be diluted down to owning only 32%. That is a fact. Continuing Marks plan - comes a 1 for 10 reverse split. Disregarding the REE results, we get no benefit. In fact we are stuck with a fixed ratio and reverse split no matter how positive ree results are.
Another outcome, the one I believe will happen, is there will be about 90-95% redemptions. This will be a huge failure. There will be very little cash from the deal. Butt there will still be a huge giveaway of equity to the sponsors/fees, around 25%. Nearly all the money will come from Yorkville who will be selling on the ask to small retail investors for what can seem an eternity. This will bring us back to square one looking for a new plan
Niocorp is registering the shares from the merger to allow them to be sold. 4 forms S-3 from yesterday and today.
S-3 dated 4-13
Up to
10,495,370 Common Shares
This is for the $16 million from Yorkville.
S-3 dated 4-13
Up to
10,588,617 Common Shares
This is advance shares to begin the $65 million from Yorkville
S-3 dated 4-14
Up to
17,519,864 Common Shares
This is for the 15.6 million warrants that may exercise
S-3 dated 4-14
Up to
16,123,149 Common Shares
For the sponsors, and to pay btig , and niocorp executives
They might wait updating the website since some of the Yorkville shares are getting ready to be registered on yesterday's s3.
The good news is at least there is a floor price $2.14 on how low they will go.
"$16,000,000 aggregate principal amount of the Convertible Debentures, plus $1,602,192 of accrued interest, (ii) a conversion price equal to the Floor Price (as defined herein) of $2.1435"
https://www.sec.gov/Archives/edgar/data/1512228/000153949723000643/n2574_x120-s3asepa.htm
NioCorp Developments Ltd.
10,588,617 Common Shares
Makes sense!
True.
From Mark's article:
"As the then-CEO of the only producing rare earth mine in the U.S. in 2010, I rate the odds of another rare earth crisis in the next five years as 9.5 out of 10."
https://www.foxnews.com/opinion/china-shut-down-military-minute-fix-looming-rare-earths-supply-crisis
Yes, it is a sweet deal that has been brought up many times. Jay and Dean paid $25k for their gxii shares which converted into 8 million NB shares - comes to .003 per share.
They also paid about $8.5 mill for their 5.667 million niobw warrants.
Yes, and a controlling interest.
But thanks for the great foresight of management we have Yorkville ready to help us in our time of need, giving $15 million cash for $16 million of convertible notes.
So now we are able to payoff our $5 million deficit leaving us with a smooth $10 mill in the bank and $16 million worth of shares on the ask.
And if you add the 2 million we gave to non redeemers you get 10 million new shares / 38 million OS or 26% bs dilution.
And the 15 million cash from the non redeemers wasn't enough to cover the $20 million in expenses.
So 26% dilution and short $5 million
It has been said since the merger was a screwup there wasn't any dilution. But the main point to know about Elk Creek Resources, I mean gxii, is it is holding 8 million shares for the benefit of Dean and Jay. A sweet 23% of pure bs dilution.
Warrant assumption agreement
https://www.sec.gov/ix?doc=/Archives/edgar/data/1512228/000153949723000458/n2574_x103-8k.htm
On March 17, 2023, the Company entered into that certain Assignment, Assumption and Amendment Agreement (the “Warrant Assumption Agreement”), by and among NioCorp, GX, Continental Stock Transfer & Trust Company, as existing warrant agent (“CST”), and Computershare Inc. and its affiliate, Computershare Trust Company, N.A., together as successor warrant agent (“Computershare”). Pursuant to the Warrant Assumption Agreement, the Company assumed all of the obligations of GX under and in respect of the Warrant Agreement, dated March 17, 2021,
The original warrant agreement is from 2021. The 10 spac price, 11.50 warrant exercise price and the 18 redemption price I believe are subject to adjustments from the merger ratio 11.1829212 and a 1 for 10 reverse split
11.50÷1.11829212= $10.28
18÷1.11829212=$16.09
https://www.sec.gov/Archives/edgar/data/1826669/000121390021017023/ea138188ex4-1gxacquisit2.htm
6.1 Redemption. Subject to Section 6.4 hereof, not less than all of the outstanding Warrants may be redeemed, at the option of the Company, at any time while they are exercisable and prior to their expiration, at the office of the Warrant Agent, upon notice to the Registered Holders of the Warrants, as described in Section 6.2 below, at the price of $0.01 per Warrant (the “Redemption Price”), provided that the last sales price of the Common Stock reported has been at least $18.00 per share (subject to adjustment in compliance with Section 4 hereof) (the “Redemption Trigger Price”)
That is not accurate. Yorkville can sell NB getting shares at 90% of 5 day vwap to allow repayment of $16 mill. The $65 million equity facility discount is 97% 5 day vwap.
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001512228/000153949723000085/n2574_x77-8k.htm
entitled to convert the principal amount of, and accrued and unpaid interest, if any, on each Convertible 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 (“VWAP”) 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”)
The exercise price was adjusted from 11.
50 to 10.28 and so forced warrant buyback at a penny will adjust from 18 to 16.1
Dean was the one with the biggest smile. hmmm wonder why.
REEs results are already baked in. Everyone expects good results even nioturd. What we really need is cash to begin preliminary construction. How much do we have?
Volume is falling back to normal range. Maybe the lower price is now factoring in the dilution that came in.
Those have been my questions as well. Mark must have been more desperate than an end of life SPAC. He admitted all financing options were exhausted.
Look at their form 4
https://www.sec.gov/Archives/edgar/data/1512228/000153949723000474/xslF345X04/ownership.xml
GXII class B changed their name to Class B Common Stock of Elk Creek Resources Corp
1. These shares of Class B common stock of Elk Creek Resources Corp. (f/k/a GX Acquisiton Corp. II) ("Elk Class B Shares"), an indirect subsidiary of the Issuer, are exchangeable for the Issuer's common shares on a one-for-one basis. These shares have no expiration date.
2. On March 17, 2023, the Issuer consummated the business combination ("Business Combination") contemplated by the Business Combination Agreement, dated as of September 25, 2022, as amended (the "Business Combination Agreement"), entered into by and among GX Acquisiton Corp. II, the Issuer, and Big Red Merger Sub Ltd, a wholly owned subsidiary of the Issuer. After the closing of the Business Combination, GX Acquisiton Corp. II changed its name to "Elk Creek Resources Corp." GX Sponsor II LLC ("Sponsor") acquired Issuer securities and derivatives thereof in the Business Combination on behalf of its members, which were then immediately distributed to Sponsor's members, including the reporting person, on a pro rata basis for no consideration.
What about the poor gxii slobs that chose not to redeem. They were down from $8.9 immediately after the merger. Would have been better to buy in the open market.
"As the parent company of the merged entity, NioCorp issued 1,753,823 common shares (the “Common Shares”) in exchange for all of the Class A shares of GXII issued and outstanding immediately prior to th"e Business Combination.
From the PR the founders get
"Further, there are 7,957,404 Class B shares of GXII (now known as Elk Creek Resources Corp.), as the surviving entity of the merger, that are exchangeable for an aggregate of up to 7,957,404 Common Shares"
https://www.niocorp.com/niocorp-closes-business-combination-with-gxii-and-separate-financing-deals-providing-access-to-up-to-us71-9-million-in-net-proceeds-over-the-next-three-years/
If the exercise price was adjusted from $11.50 to $10.
28 then the price to call the warrants at $18 should be adjusted to $16.09
18÷1.11829212 = 16.09
So a possible scenario though highly unlikely is if positive ree results are expected by everyone, what if ree results are not as rosy as planned?
Is the EXIM approval dependent on good ree results? Could NB apply now to EXIM based on last year's FS?
The problem comes up as another delay. After ree results, after 45 more days for FS, after more time to prepare EXIM application, after another 6 to 9 months, then NB is ready for a move. 2024
Also positive ree results are expected by everyone, so I don't see that moving the stock price anymore, but as usual with NB I hope I am wrong.
Yorkville/Lind convertible debentures are always available. It is the worst kind of financing. It is toxic. Why when launching on nasdaq do we have to resort to this type of damaging finance? Spacs always get paired up with PIPES, maybe that's why their stocks do so poorly after merging.
The pathetic 15 million from gxii was lost in the 20 million of expenses belonging to gxii. When gxii did their IPO in 2021 they deferred everything to be paid for by their merger partner - us. So disregard Jim's comments, we paid cantor Fitz for gxii, we paid btig for gxii and on and on.
So what did gxii do for us that we couldn't have done alone?
I agree. Seems there were 2 likely outcomes.
1. No redemptions and NB gets $300 million by selling shares at .89; I was not in favor of selling shares on the cheap.
2. maximum redemptions giving NB no cash but still dilution. This is the worst situation. GXII gave us nothing we couldn't have achieved alone. The last 6 months was a waste of time, still no cash and plenty of dilution. Back to square one.
Mark could have pushed back for higher minimum cash requirements as the SPAC sponsors would probably do anything to salvage a deal.
https://yetanothervalueblog.substack.com/p/what-can-you-learn-from-how-a-spac
"The reason I find that so interesting is a failure to deliver the minimum cash in a SPAC creates a negotiation between the SPAC sponsor and the target company. It’s a negotiation that the target company comes to with a lot of leverage; if the target doesn’t waive the condition and lets the deal fall through, then the SPAC is near guaranteed to fail"
I think you are correct but it is confusing.
The number of warrants 15.6 million and their price of approx .70 was left unchanged but the exercise price (10.28) and the multiplier (1.11829212) were changed. Hmm
"15,666,667 Assumed Warrants exercisable for an aggregate of up to 17,519,910 Common Shares. All existing convertible securities of the Company have proportionally adjusted as result of the Consolidation, in accordance with their respective terms"