UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the transition period from     to

NioCorp Developments Ltd.

(Exact Name of Registrant as Specified in its Charter)

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☒   No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

Yes☒   No☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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:

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.☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes☐   No☒

As of February 9,November 8, 2018, the registrant had 208,861,265221,846,266 Common Shares outstanding.

TABLE OF CONTENTS

TABLE OF CONTENTS

PART I— FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Contents

NioCorp Developments Ltd.

Condensed Consolidated Balance Sheets

(expressed in thousands of U.S. dollars, except share data) (unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

NioCorp Developments Ltd.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(expressed in thousands of U.S. dollars, except share and per share data) (unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

NioCorp Developments Ltd.

Condensed Consolidated Statements of Cash Flows

(expressed in thousands of U.S. dollars) (unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

NioCorp Developments Ltd.

Condensed Consolidated Statements of Shareholders’ EquityCash Flows

(expressed in thousands of U.S. dollars, except for Common Shares Outstanding)dollars) (unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

NioCorp Developments Ltd.

Condensed Consolidated Statements of Shareholders’ Equity

(expressed in thousands of U.S. dollars, except for Common Shares outstanding) (unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

NioCorp Developments Ltd.

Notes to the Condensed Consolidated Financial Statements

December 31, 2017

September 30, 2018

(expressed in thousands of U.S. dollars, unlessexcept per share amounts or as otherwise stated) (unaudited)

NioCorp Developments Ltd. (“NioCorp” or the “Company”) was incorporated on February 27, 1987 under the laws of the Province of British Columbia and currently operates in one reportable operating segment consisting of exploration and development of mineral deposits in North America, specifically, the Elk Creek Niobium/Scandium/Titanium property (the “Elk Creek Project”) located in southeastern Nebraska.

These financial statements have been prepared on a going concern basis that contemplates the realization of assets and discharge of liabilities at their carrying values in the normal course of business for the foreseeable future. These financial statements do not reflect any adjustments that may be necessary if the Company is unable to continue as a going concern.

The Company currently earns no operating revenues and will require additional capital in order to advance the Elk Creek Project. The Company’s ability to continue as a going concern is uncertain and is dependent upon the generation of profits from mineral properties, obtaining additional financing, and maintaining continued support from its shareholders and creditors.

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles of the United States of America (“US GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). The interim condensed consolidated financial statements include the consolidated accounts of the Company and its wholly-owned subsidiaries with all significant intercompany transactions eliminated. The accounting policies followed in preparing these interim condensed consolidated financial statements are those used by the Company as set out in the audited consolidated financial statements for the year ended June 30, 2017.2018.

In the opinion of Management,management, all adjustments considered necessary (including reclassifications and normal recurring adjustments) to present fairly the financial position, results of operations, and cash flows at December 31, 2017,September 30, 2018, and for all periods presented, have been included in these interim condensed consolidated financial statements. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to appropriate SEC rules and regulations. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended June 30, 2017.2018. The interim results are not necessarily indicative of results for the full year ending June 30, 2018,2019, or future operating periods.

Issued and Adopted

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Improvements to Employee Share-Based Payment Accounting. The amendments in this ASU require, among other things, that all income tax effects of awards be recognized in the income statement when the awards vest or are settled. The ASU also allows for an employer to repurchase more of an employee’s shares than it can today for tax withholding purposes without triggering liability accounting, and it allows for a policy election to account for forfeitures as they occur. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. We adopted this guidance during the quarter ended September 30, 2017. The adoption of this ASU had no material impacts on our financial statement results or disclosures.

Issued and Not Effective

From time to time, new accounting pronouncements are issued by the FASBFinancial Accounting Standards Board (“FASB”) that are adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards did not or will not have a material impact on the Company’s consolidated financial statements upon adoption.

In February 2016, Accounting Standards Update (“ASU”) 2016-02 was issued related to leases, which was further amended in September 2017 by ASU 2017-13, in January 2018 by ASU 2018-01 and in July 2018 by ASU 2018-10 and 2018-11. The new guidance modifies the classification criteria and requires lessees to recognize the assets and liabilities arising from most leases on the balance sheet. The new guidance is effective for the Company’s fiscal year beginning December 1, 2019 and early adoption is permitted. The Company anticipates adopting the new guidance effective with our fiscal year beginning July 1, 2020. Adoption of this guidance is not expected to materially increase the Company’s assets and liabilities.

NioCorp Developments Ltd.

Notes to the Condensed Consolidated Financial Statements

December 31, 2017

September 30, 2018

(expressed in thousands of U.S. dollars, unlessexcept per share amounts or as otherwise stated) (unaudited)

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The update clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company will apply the provisions of the update to potential future acquisitions occurring after the effective date.

In February 2016,June 2018, the FASB issued ASU 2016-02, Leases.2018-07, Compensation - Stock Compensation — Improvements to Nonemployee Share-Based Payment Accounting. This update aims to simplify the accounting for share-based payments awarded to non-employees for goods or services acquired. The standard requiresupdate specifies that a lessee recognize on the balance sheet assetsmeasurement date is the grant date and liabilities for leases with lease terms of more than twelve months.that awards are required to be measured at fair value. The recognition, measurement, and presentation of expenses and cash flows arising from a lease have not significantly changed from the previous US GAAP. The standard isamendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within suchthose fiscal year,years. The Company is currently evaluating the potential impact of adopting this guidance on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13 - Fair Value Measurements (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This update modifies the disclosure requirements on fair value measurements in Topic 820 and eliminates ‘at a minimum’ from the phrase ‘an entity shall disclose at a minimum’ to promote the appropriate exercise of discretion by entities when considering fair value disclosures and to clarify that materiality is an appropriate consideration. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The Company is currently assessingevaluating the impact, if any,impacts that adoption of implementing this guidance will have on its consolidated financial position, results of operations, and liquidity.statements.

The preparation of consolidated financial statements in conformity with US GAAP requires Managementmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuations, convertible debt valuations, and share-based compensation. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between estimates and the actual results, future results of operations will be affected.

Certain prior year amounts have been reclassified to conform to fiscal 2018 presentation and these reclassifications had no effect on the reported results of operations or net equity as previously disclosed.

The Company incurred a loss of $3,773$1,731 for the sixthree months ended December 31, 2017 (2016September 30, 2018 (2017 - $6,322),$1,813) and had a working capital deficit and an accumulated deficit of $4,370$491 and $78,625,$85,080, respectively, as of December 31, 2017.September 30, 2018. These factors indicate the existence of a material uncertainty that raises substantial doubt about the Company’s ability to continue as a going concern.

The Company’s ability to continue operations and fund its expenditures is dependent on Management’smanagement’s ability to secure additional financing. Management is actively pursuing such additional sources of 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. These consolidated financial statements do not give effect to any adjustments required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying financial statements.

Restricted cash represents amounts held in escrow to secure payment of work related to the Company’s Elk Creek Feasibility Study. Under the terms of the escrow agreement, the balance of $265 was drawn against outstanding accounts payable during the quarter ended September 30, 2017.

NioCorp Developments Ltd.

Notes to the Condensed Consolidated Financial Statements

December 31, 2017

(expressed in thousands of U.S. dollars, unless otherwise stated) (unaudited)

Other current assets include legal and other professional fees associated with obtaining project debt financing for the Elk Creek Project. Amounts will be deferred until funding is completed, at which time the balance will become a direct deduction from the related debt liability.

NioCorp Developments Ltd.

Notes to the Condensed Consolidated Financial Statements

September 30, 2018

(expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited)

Convertible Security Funding

Changes in the Lind Partners Asset Management IV, LLC (“Lind”) convertible security (the “Convertible Security”)securities balance are comprised of the following:

On August 10, 2017,June 27, 2018, the Company signed a definitive convertible security funding agreement (the “Subsequent Lind provided noticeAgreement”) with Lind. Pursuant to the Companyissuance of its election to advance an additional $1.0 million in funding (the “Initial Convertible Security Increase”) under thea convertible security (the ‘Initial“Subsequent Convertible Security” and, together with the previous Lind convertible security (the “Original Lind Security), the “Convertible Securities”) pursuant to its right under, a total of $1,000 was funded on July 9, 2018. The Subsequent Lind Agreement replaces the Convertible Security Funding Agreement, dated December 14, 2015, between the Company and Lind (the “Lind“Original Lind Agreement”). in respect of the remaining $1,000 funding amount available under the Original Lind Agreement and accordingly, no further funding will be provided by Lind to the Company under the Original Lind Agreement. The terms of the Subsequent Convertible Security are substantially similar to the terms governing like securities under the Original Lind Agreement. As a result, upon payment of the additional $1,000 in funding by Lind to the Company, the face value of the InitialSubsequent Convertible Security was increased byissued in the amount of $1,200 ($1,000 in additional funding plus implied interest), and the Company issued Warrantswarrants (“Warrants”) to Lind, as follows:

The Initial Convertible Security isSecurities are convertible into Common Shares of the Company (Common Shares”) at a conversion price equal to 85% of the volume weighted average trading price (“Volume Weighted Average Price”) of the Common Shares (in Canadian dollars) on the Toronto Stock Exchange (the “TSX”) for the five consecutive trading days immediately prior to the date on which Lind provides the Company with notice of its intention to convert an amount of the Initialapplicable Convertible Security from time to time. During the six-monththree-month period ended December 31, 2017, $2,425September 30, 2018, $1,000 principal amount of the InitialOriginal Convertible Security was converted into 6,696,5902,547,427 Common Shares.

NioCorp Developments Ltd.

Notes to the Condensed Consolidated Financial Statements

December 31, 2017

(expressed in thousands of U.S. dollars, unless otherwise stated) (unaudited)

The Convertible SecuritySecurities contains financial and non-financial covenants customary for a facility of its size and nature, and includes a financial covenant defining an event of default as all present and future liabilities of the Company or any of its subsidiaries, exclusive of related party loans, for an amount or amounts exceeding $2,000 and which have not been satisfied on time or within 90 days of invoice, or have become prematurely payable as a result of its default or breach. The Company was in compliance with these covenants as of December 31, 2017.September 30, 2018.

NioCorp Developments Ltd.

Notes to the Condensed Consolidated Financial Statements

September 30, 2018

(expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited)

Convertible Notes

Changes in the Company’s outstanding convertible promissory notes (the “Convertible Notes”) balance are comprised of the following:

The changes in the derivative liability related to the conversion feature of the Convertible Notes are as follows:

Effective October 10, 2018, the due date for the Convertible Notes was extended for one year to October 14, 2019. All other terms and conditions remained unchanged.

On July 26, 2017,September 14, 2018, the Company closedcompleted the first tranche closing (the “First Tranche Closing”) of a brokerednon-brokered private placement (the “July 2017 Private Placement”“September 2018 Offering”) of units (the “Units”(each a “Unit”). The First Tranche Closing consisted of the Company. Under the July 2017 Private Placement,issuance of 2,917,587 Units, at a totalprice of 2,962,500 Units were issued at C$0.650.63 per Unit, for total gross proceeds to the Company of approximately C$1,926.1,838. Each Unit issued pursuant toin connection with the July 2017 Private PlacementFirst Tranche Closing consists of one Common Share and one-half of one warrant of the Company (“Warrant”).Warrant. Each Warrant entitles the holder thereof to purchase one additional Common Share at a price of C$0.790.75 until July 26, 2021.September 14, 2020.

The July 2017 Private Placement was brokered by Mackie Research Capital CorporationOn September 28, 2018, the Company completed the second and final tranche closing (the “Agent”). The Company paid the Agent an aggregate cash commission of approximately C$125, equal to six and a half per cent (6.5%“Second Tranche Closing”) of the September 2018 Offering. The Second Tranche Closing consisted of the issuance of 2,057,571 Units, at a price of C$0.63 per Unit, for gross proceeds raised underof C$1,296. Each Unit issued in connection with the July 2017 Private Placement. The Company also issued to the Agent 192,562 broker warrants (the “Broker Warrants”), equal to sixSecond Tranche Closing consists of one Common Share and a half per cent (6.5%)one-half of the Units sold pursuant to the July 2017 Private Placement.one Warrant. Each Broker Warrant entitles the holder thereof to purchase one additional Common Share at a price of C$0.790.75 until July 26, 2021. The fair value of the Broker Warrants of $41 was estimated based on the Black Scholes pricing model using a risk-free interest rate of 1.32%, an expected dividend yield of 0%, a volatility of 60.3%, and an expected life of four years. Total cash issue costs including agents’ commission, legal and other fees was $189.September 28, 2020.

Proceeds ofNet proceeds from the July 2017 Private Placement wereSeptember 2018 Offering will be used for general working capital purposes and to continue to advance the Company’s Elk Creek Project.

On September 5, 2017,by the Company entered into a shares-for-debt agreement with Northcott Capital Limited (“Northcott”) whereby NioCorp issued 415,747 Common Shares to settle a debtfor continued development of C$253,606 owed to Northcott for past and prospective services through December 2017. Northcott manages NioCorp’s current effort to assemble a debt financing package as part of the Company’s overall Elk Creek Project financing effort.and for general corporate purposes. The shares issuedCompany paid cash commissions of C$18 in connection with the September 2018 Offering to Northcott were priced at C$0.61 per share, which represents a 10% premium over the five-day Volume Weighted Average Pricebrokers outside of the Common Shares of C$0.5571 as of the date of the agreement.

NioCorp Developments Ltd.

Notes to the Condensed Consolidated Financial Statements

December 31, 2017

(expressed in thousands of U.S. dollars, unless otherwise stated) (unaudited)United States.

On November 9, 2017, the Company’s shareholders voted to approve a new Long-Term Incentive Plan (the “Long-Term Incentive Plan”) and the granting of incentive securities thereunder until November 9, 2020. Under the Long-Term Incentive Plan, the Company’s Board of Directors (the “Board”) may, in its discretion from time to time, grant Options and share units (in the form of RSUs and PSUs) to directors, employees and certain other service providers (as defined in the Long-Term Incentive Plan) of the Company and affiliated entities selected by the Board.

Subject to adjustment as described in the Long-Term Incentive Plan, the aggregate number of Common Shares that may be reserved for issuance to participants under the Long-Term Incentive Plan, together with all other security -based compensation arrangements of the Company, including with respect to Options outstanding under the Company’s 2016 Incentive Stock Option Plan, may not exceed 10% of the issued and outstanding Common Shares from time to time, and the Common Shares reserved for issuance upon settlement of share units shall not exceed 5% of the issued and outstanding Common Shares from time to time. The Long-Term Incentive Plan limits the maximum number of Common Shares issued to insiders (as defined under TSX rules for this purpose) within any one-year period, or issuable to insiders at any time, in the aggregate, under all security -based compensation arrangements (including the Long-Term Incentive Plan) to 10% of the then issued and outstanding Common Shares. The Long-Term Incentive Plan also limits the aggregate number of Common Shares that may be reserved for issuance to any one participant under the Long-Term Incentive Plan, together with all other security -based compensation arrangements of the Company, to 5% of the then issued and outstanding Common Shares (on a non-diluted basis). Under the Long-Term Incentive Plan, Options and share units granted to non-employee directors, together with all other equity awards, are limited to an annual equity award value of C$150 per non-employee director. The total value of Options issuable to a non-employee director in a one-year period is limited to C$100. Further, and subjectNioCorp Developments Ltd.

Notes to the adjustment provisionsCondensed Consolidated Financial Statements

September 30, 2018

(expressed in thousands of the Long-Term Incentive Plan, the aggregate number of Common Shares actually issuedU.S. dollars, except per share amounts or transferred by the Company upon the exercise of incentive stock options will not exceed 20,451,895 Common Shares.

The Board has the exclusive power over the granting, amendment, administration or settlement of any award.

Stock option transactions are summarized as follows:otherwise stated) (unaudited)

The following table summarizes information about stock options to purchase Common Shares (“Options”) outstanding at December 31, 2017:September 30, 2018:

NioCorp Developments Ltd.

Notes to the Condensed Consolidated Financial Statements

December 31, 2017

(expressed in thousands of U.S. dollars, unless otherwise stated) (unaudited)

The aggregate intrinsic value in the preceding table represents the total intrinsic value, based on the Company’s closing Common Share price of C$0.740.57 as of December 31, 2017,September 30, 2018, that would have been received by the optionOption holders had all optionOption holders exercised their optionsOptions as of that date. The total number of in-the-money optionsOptions vested and exercisable as of December 31, 2017September 30, 2018, was 9,189,909.3,800,000. The total intrinsic value of optionsOptions exercised during the sixthree months ended December 31, 2017September 30, 2018, was nil.C$8.

As of December 31, 2017,September 30, 2018, there was $247 ofno unrecognized compensation cost related to unvested share-based compensation arrangements granted under the 2016 Incentive Stock Option Plan. The cost is expected to be recognized over a remaining weighted average period of approximately 0.7 years.plans.

Warrant transactions are summarized as follows:

As discussed above under Note 6,5, the Company granted 1,207,9291,035,319 Warrants to Lind in connection with the funding of the Convertible Security Increase.funding increases. As discussed above under Note 7a,6a, the Company granted 2,962,500 Warrants and 192,562 Broker2,487,577 Warrants in conjunction with the July 2017 Private Placement.September 2018 Offering.

NioCorp Developments Ltd.

Notes to the Condensed Consolidated Financial Statements

September 30, 2018

(expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited)

At December 31, 2017,September 30, 2018, the Company has outstanding exercisable Warrants, as follows:

The Company has a loan with Mark Smith, President, Chief Executive Officer (“CEO”) and Executive Chairman of NioCorp (the “Original Smith Loan”), that bears an interest rate of 10%, is secured by the Company’s assets pursuant to a concurrently executed general security agreement (the “General Security Agreement”), and is subject to both a 2.5% establishment fee and 2.5% prepayment fee. The principal amount outstanding under the Original Smith Loan is $1,000, and is due on June 17, 2018.

NioCorp Developments Ltd.

Notes to the Condensed Consolidated Financial Statements

December 31, 2017

(expressed in thousands of U.S. dollars, unless otherwise stated) (unaudited)$1,000.

The Company also has a non-revolving credit facility agreement (the “Credit Facility”) in the amount of $2,000 with Mr. Smith. The Credit Facility bears an interest rate of 10% and drawdowns from the Credit Facility are subject to a 2.5% establishment fee. Amounts outstanding under the Credit Facility are secured by all of the Company’s assets pursuant to the General Security Agreement. The Credit Facility contains financial and non-financial covenants customary for a facility of its size and nature and is due on June 16, 2018. During the quarter ended December 31, 2017, Mr. Smith advanced an additional $180 to the Company under the Credit Facility. nature.

As of December 31, 2017,September 30, 2018, the principal amount outstanding under the Credit Facility is $355was $480 and accounts payable and accrued liabilities included interest payable and loan establishment fees payable to Mr. Smith of $176.

On June 20, 2016, the Company announced a joint development agreement (the “Development Agreement”) with IBC Advanced Alloys Corp. (“IBC”) to investigate and develop applications for scandium-containing alloys for multiple downstream markets. In addition to his management duties at NioCorp, Mark Smith is also the Chairman of the IBC Board of Directors. Under the terms of the Development Agreement, each party bears its own costs incurred in development efforts. During the quarter ended December 31, 2017 the company supplied IBC with a small quantity of Scandium Trioxide which was used to manufacture several aluminum-scandium alloy ingots. The ingots, representing a range of scandium content, will undergo chemical analysis and other metallurgical testing to confirm the microstructure and performance of the alloys.$109.

NioCorp Developments Ltd.

On December 22, 2017, President Trump signed into lawNotes to the Tax Cuts and Jobs Act (the “Act”), which took effect on January 1, 2018. Some notable provisionsCondensed Consolidated Financial Statements

September 30, 2018

(expressed in thousands of the Act include a reduction of the corporate income tax rate from 35% to 21%, 100% bonus depreciation for certain capital expenditures, and a change from a worldwide system with deferral to a territorial tax system, which includes a one-time toll charge on certain undistributed earnings of non-U.S. subsidiaries. The Company does not expect any material impacts of this new legislation on its consolidated financial statements.U.S. dollars, except per share amounts or as otherwise stated) (unaudited)

The Company measures the fair value of financial assets and liabilities based on US GAAP guidance which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

The Company classifies financial assets and liabilities as held-for-trading, available-for-sale, held-to-maturity, loans and receivables, or other financial liabilities depending on their nature. Financial assets and financial liabilities are recognized at fair value on their initial recognition.

Financial assets and liabilities classified as held-for-trading are measured at fair value, with gains and losses recognized in net income. Financial assets classified as held-to-maturity, loans and receivables, and financial liabilities other than those classified as held-for-trading are measured at amortized cost, using the effective interest method of amortization. Financial assets classified as available-for-sale are measured at fair value, with unrealized gains and losses being recognized in income.

Financial instruments including receivables, accounts payable and accrued liabilities, and related party loans are carried at amortized cost, which Managementmanagement believes approximates fair value due to the short-term nature of these instruments.

The following table presentstables present information about the assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2017September 30, 2018 and June 30, 2017,2018, respectively, and indicatesindicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical instruments. Fair values determined by Level 2 inputs utilize data points that are observable, such as quoted prices, interest rates, and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the financial instrument and include situations where there is little, if any, market activity for the instrument:instrument.

The Company measures the fair market value of the Level 3 components using the Black Scholes model and discounted cash flows, as appropriate. These models take into account Management’smanagement’s best estimate of the conversion price of the stock, an estimate of the expected time to conversion, an estimate of the stock’s volatility, and the risk-free rate of return expected for an instrument with a term equal to the duration of the convertible debt.

NioCorp Developments Ltd.

Notes to the Condensed Consolidated Financial Statements

September 30, 2018

(expressed in thousands of U.S. dollars, except per share amounts or as otherwise stated) (unaudited)

The following table sets forth a reconciliation of changes in the fair value of the Company’s convertible debt components classified as Level 3 in the fair value hierarchy:

12. Subsequent eventsSee Note 5 for disclosure regarding the extension of the due date for the Convertible Notes.

Pursuant to notice provided by Lind toOn October 8, 2018, the Company and IBC Advanced Alloys (“IBC”) announced the successful production of its election to advance an additional $2,500 in funding underaluminum-scandium master alloy. The master alloy was produced at the Initial Convertible Security and the Lind Agreement (the “Second Tranche Increase”), Lind funded the full $2,500 Second Tranche Increase as of February 7, 2018. Upon paymentAmes Laboratory, a U.S. government-owned, contractor-operated national laboratory of the full $2,500U.S. Department of Energy, located in funding by LindAmes Iowa. NioCorp and IBC intend to utilize the Company,master alloy from this program to further the face amountcompanies’ ongoing efforts to develop specialty scandium-containing alloys and/or prototype products for potential commercial use. The two companies are operating under a joint development agreement to investigate and develop applications for scandium-containing materials for a range of the Initial Convertible Security was increased by $3,000 ($2,500 in additional funding and $500 in implied interest amount). In connection with the funding, the Company issued Common Share purchase warrants (the ‘Second Tranche Warrants”) to Lind as follows:

In addition, the terms of the Lind Agreement, as amended, provide for additional funding of up to $2,000 as part of the second tranche, subject to certain conditions, for total gross proceeds to the Company of up to $4,500.downstream markets.

In January

On October 10, 2018, Mark Smith advanced an additional $125 in funding under the existing Credit FacilityCompany announced that it signed a commercial sales agreement with Traxys North America LLC (“Traxys”) for up to 120 tonnes of scandium trioxide over the Company. This fundingfirst 10 years of operation of the Elk Creek Project. The contract presupposes the Company securing project financing, obtaining all necessary approvals, and constructing a mine and processing facility at Elk Creek. Under the sales agreement, Traxys is obligated to purchase 12 tonnes per year of scandium trioxide for the first 10 years of the Elk Creek Project’s production, subject to satisfaction of certain conditions. That annual amount represents approximately 10 percent of NioCorp’s planned annual production of Scandium. Traxys can purchase more than 12 tonnes per year from NioCorp, and the same termsagreement can be extended beyond the 10-year term, by mutual agreement. Pursuant to the commercial sales agreement, Traxys will focus its scandium sales and conditionsmarketing efforts on customers in the aerospace and sporting goods sectors, and it retains the exclusive right to sell NioCorp scandium to those sectors. In return, pursuant to the commercial sales agreement, Traxys has agreed to purchase its entire needs of scandium trioxide, scandium alloys, scandium master alloy and other scandium-based products exclusively from NioCorp, including for scandium sales to other sectors, subject to availability of adequate supplies by NioCorp and other conditions. Pursuant to the commercial sales agreement, NioCorp will work with Traxys to promote and market scandium to the aerospace, sporting goods and other industry sectors. NioCorp retains the right to make direct sales of scandium to markets outside of aerospace and sporting goods, as well as direct sales to the prior drawdowns under the Credit Facility and will be used for general corporate purposes.U.S. Government.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our unaudited condensed interim consolidated financial statements as of, and for the three and six months ended December 31, 2017September 30, 2018, and the related notes thereto, which have been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”). This discussion and analysis contains forward-looking statements and forward-looking information that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements and information as a result of many factors, including, but not limited to, those set forth elsewhere in this Quarterly Report on Form 10-Q. See “Note Regarding Forward-Looking Statements” below.

All currency amounts are stated inthousands of U.S. dollars unless noted otherwise.

As used in this report, unless the context otherwise indicates, references to “we,” “our,” the “Company,” “NioCorp,” and “us” refer to NioCorp Developments Ltd. and its subsidiaries, collectively.

Note Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q and the exhibits attached hereto contain “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”), and “forward-looking information” within the meaning of applicable Canadian securities legislation (collectively, “forward-looking statements”). Such forward-looking statements concern our anticipated results and developments in the operations of the Company in future periods, planned exploration activities, the adequacy of the Company’s financial resources, and other events or conditions that may occur in the future. Forward-looking statements are frequently, but not always, identified by words such as “expects,” “anticipates,” “believes,” “intends,” “estimates,” “potential,” “possible,” and similar expressions, or statements that events, conditions, or results “will,” “may,” “could,” or “should” (or the negative and grammatical variations of any of these terms) occur or be achieved. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, or future events or performance (often, but not always, using words or phrases such as “expects” or “does not expect,” “is expected,” “anticipates” or “does not anticipate,” “plans,” “estimates,” or “intends,” or stating that certain actions, events, or results “may,” “could,” “would,” “might,” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Such forward-looking statements reflect the Company’s current views with respect to future events and are subject to certain known and unknown risks, uncertainties, and assumptions. Many factors could cause actual results, performance, or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including, among others, risks related to the following:

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. This list is not exhaustive of the factors that may affect any of the Company’s forward-looking statements. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties, and other factors, including without limitation those discussed under the heading “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended June 30, 2017,2018, as well as other factors described elsewhere in this report and the Company’s other reports filed with the SEC.Securities and Exchange Commission (“SEC”).

The Company’s forward-looking statements contained in this Quarterly Report on Form 10-Q are based on the beliefs, expectations, and opinions of Managementmanagement as of the date of this report. The Company does not assume any obligation to update forward-looking statements if circumstances or Management’smanagement’s beliefs, expectations, or opinions should change, except as required by law. For the reasons set forth above, investors should not attribute undue certainty to, or place undue reliance on, forward-looking statements.

National Instrument 43-101 Compliance

Scott Honan, M.Sc., SME-RM, a qualified person as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”), has supervised the preparation of the scientific and technical information that forms the basis for the Elk Creek Project disclosure in this Quarterly Report on Form 10-Q and has approved the disclosure in this Quarterly Report on Form 10-Q related thereto. Mr. Honan is not independent of the Company, as he is the Vice President, Business Development. For additional information on the Elk Creek Project, including information relating to exploration, data verification, the mineral resource estimates and the mineral reserve estimates, see the Revised NI 43-101 Technical Report (the “Revised Elk Creek Feasibility Study”), dated December 15, 2017, which is available under NioCorp’s profile on the Canadian Securities Administrators website at www.sedar.com (“SEDAR”).www.sedar.com.

Company Overview

NioCorp is developing the Elk Creek Project, located in southeast Nebraska. The Elk Creek Project is an advanced Niobium (Nb)/Scandium (Sc)/Titanium (Ti) exploration project. Niobium is used to produce various superalloys that are extensively used in high performance aircraft and jet turbines. It also is used in High-Strength, Low-Alloy (“HSLA”) steel, a stronger steel used in automotive, bridges, structural systems, buildings, pipelines, and other applications that generally reduces the weight of those applications, which can result in environmental benefits, including reduced fuel consumption and material usage and fewer air emissions. Scandium can be combined with aluminum to make super-high-performancehigh-performance alloys with increased strength and improved corrosion resistance. Scandium also is a critical component of advanced solid oxide fuel cells, an environmentally preferred technology for high-reliability, distributed electricity generation. Titanium is a component of various superalloys and other applications that are used for aerospace applications, weapons systems, protective armor, medical implants and many others. It also is used in pigments for paper, paint, and plastics.

Our primary business strategy is to advance our Elk Creek Project to commercial production. We are focused on obtaining additional funds to carry out our near-term planned work programs associated with securing the project financing necessary to complete mine development and construction of the Elk Creek Project. With the recent filing of the Revised Elk Creek Feasibility Study (see “Elk Creek Project Update,” below), we are currently working to obtain the financing necessary to advance the Elk Creek Project to construction and operations, as well as conducting permitting and other related activities at and for the Elk Creek Project.

Emerging Growth Company Status

We qualify as an “emerging growth company” as defined in Section 101 of the Jumpstart our Business Startups Act (“JOBS Act”) as we do not have more than $1.07 billion in annual gross revenue and did not have such amount as of June 30, 2017,2018, this being the last day of our most recently completed fiscal year.

We may lose our status as an emerging growth company on the last day of our fiscal year during which (i) our annual gross revenue exceeds $1.07 billion or (ii) we issue more than $1.07 billion in non-convertible debt in a three-year period. We will lose our status as an emerging growth company if at any time we are deemed to be a large accelerated filer, as defined in Rule 405 under the Exchange Act. We will lose our status as an emerging growth company on the last day of our fiscal year following the fifth anniversary of the date of our first sale of Common Shares pursuant to an effective registration statement.

As an emerging growth company under the JOBS Act, we have elected to opt out of the extended transition period for complying with new or revised standards pursuant to Section 107(b) of the JOBS Act. The election is irrevocable.

As an emerging growth company, we are exempt from Section 404(b) of the Sarbanes-Oxley Act of 2002 and Section 14A(a) and (b) of the Exchange Act. Such sections are described below:

As long as we qualify as an emerging growth company, we will not be required to comply with the requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 and Section 14A (a) and (b) of the Exchange Act.

Recent Corporate Events

Long-termOn October 10, 2018, the Company announced that it signed a commercial sales agreement with Traxys North America LLC (“Traxys”) for up to 120 tonnes of scandium trioxide over the first 10 years of operation of the Elk Creek Project. The contract presupposes the Company securing project financing, obtaining all necessary approvals, and constructing a mine and processing facility at Elk Creek. Under the sales agreement, Traxys is obligated to purchase 12 tonnes per year of scandium trioxide for the first 10 years of the Elk Creek Project’s production, subject to satisfaction of certain conditions. That annual amount represents approximately 10 percent of NioCorp’s planned annual production of Scandium. Traxys can purchase more than 12 tonnes per year from NioCorp, and the agreement can be extended beyond the 10-year term, by mutual agreement. Pursuant to the commercial sales agreement, Traxys will focus its scandium sales and marketing efforts continued duringon customers in the quarter ended December 31, 2017,aerospace and sporting goods sectors, and it retains the exclusive right to sell NioCorp scandium to those sectors. In return, pursuant to the commercial sales agreement, Traxys has agreed to purchase its entire needs of scandium trioxide, scandium alloys, scandium master alloy and other scandium-based products exclusively from NioCorp, including for scandium sales to other sectors, subject to availability of adequate supplies by NioCorp and other conditions. Pursuant to the commercial sales agreement, NioCorp will work with principal activities focused on outreachTraxys to promote and discussions with several potential sourcesmarket scandium to the aerospace, sporting goods and other industry sectors. NioCorp retains the right to make direct sales of project funding,scandium to markets outside of aerospace and sporting goods, as well as completingdirect sales to the technical due diligence review (the “technical review”)U.S. Government.

In September 2018, the Company completed the September 2018 Offering and received aggregate gross proceeds of approximately C$3.13 million. In connection with the September 2018 Offering, the Company issued an aggregate total of 4,975,158 Units at a price of C$0.63 per Unit. Each Unit was comprised of one Common Share of the Company’s recently released Revised Elk Creek Feasibility Study by RPM Global USA, Inc. on behalfCompany and one half of one Warrant. Each full Warrant entitles the holder to acquire a potential debt financing syndicate. The technical review is projected to be completed in the quarter ending March 31, 2018. The technical review will provide an independent analysis and opinion on the technical contentCommon Share of the Revised Elk Creek Feasibility Study, and will be provided to financial institutions expected to form debt and/Company at a price of C$0.75 until September 14 or equity syndicates that will help finance the Elk Creek Project.September 28, 2020.