Exhibit 99.2
NovaCopper Inc.
Pro-Forma Consolidated Financial Statements
May 31, 2016
Unaudited
(expressed in US dollars)
Table of Contents
| Pro-Forma Consolidated Balance Sheet | 3 |
| | |
| Pro-Forma Interim Consolidated Statements of Loss and Comprehensive Loss | 4 |
| | |
| Pro-Forma Consolidated Statements of Loss and Comprehensive Loss | 5 |
| | |
| Notes to the Pro-Forma Consolidated Financial Statements | 6 |
Pro-Forma Consolidated Balance Sheet
(Unaudited)
As at May 31, 2016
In thousands of US dollars
| | | May 31,
2016
$ | | | Note 2 | | Pro-forma
adjustments
$ | | | Pro-forma
$ | |
| Assets | | | | | | | | | | | | | | |
| Current assets | | | | | | | | | | | | | | |
| Cash and cash equivalents | | | 13,000 | | | (c) | | | (93 | ) | | | 12,907 | |
| Investments | | | - | | | (b) | | | 7,777 | | | | 7,777 | |
| Accounts receivable | | | 42 | | | | | | | | | | 42 | |
| Deposits and prepaid amounts | | | 688 | | | (c) | | | (35 | ) | | | 653 | |
| | | | 13,730 | | | | | | 7,649 | | | | 21,379 | |
| | | | | | | | | | | | | | | |
| Investments | | | - | | | (b) | | | 326 | | | | 326 | |
| Plant and equipment | | | 345 | | | (c) | | | (210 | ) | | | 135 | |
| Mineral properties and development costs | | | 33,850 | | | (c) | | | (3,264 | ) | | | 30,586 | |
| | | | 47,925 | | | | | | 4,501 | | | | 52,426 | |
| | | | | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | | | | |
| Current liabilities | | | | | | | | | | | | | | |
| Accounts payable and accrued liabilities | | | 469 | | | (c) | | | (17 | ) | | | 555 | |
| | | | | | | (d) | | | 103 | | | | | |
| | | | 469 | | | | | | 86 | | | | 555 | |
| | | | | | | | | | | | | | | |
| Shareholders’ equity | | | | | | | | | | | | | | |
| Share capital | | | 136,117 | | | | | | | | | | 136,117 | |
| Warrants | | | 2,163 | | | | | | | | | | 2,163 | |
| Contributed surplus | | | 124 | | | | | | | | | | 124 | |
| Contributed surplus – options | | | 18,081 | | | | | | | | | | 18,081 | |
| Contributed surplus – units | | | 1,216 | | | | | | | | | | 1,216 | |
| Deficit | | | (110,245 | ) | | (e) | | | 4,415 | | | | (105,830 | ) |
| | | | 47,456 | | | | | | 4,415 | | | | 51,871 | |
| | | | 47,925 | | | | | | 4,501 | | | | 52,426 | |
(See accompanying notes to the unaudited pro-forma consolidated financial statements)
Pro-Forma Interim Consolidated
Statements of Loss and Comprehensive Loss
(Unaudited)
For the six months ended May 31, 2016
in thousands of US dollars
| | | For the six months
ended
May 31, 2016
$ | | | Note 2(a)
$ | | | Pro-forma
$ | |
| Expenses | | | | | | | | | | | | |
| Amortization | | | 106 | | | | (63 | ) | | | 43 | |
| Foreign exchange loss | | | 10 | | | | (5 | ) | | | 5 | |
| General and administrative | | | 722 | | | | (5 | ) | | | 717 | |
| Investor relations | | | 50 | | | | | | | | 50 | |
| Mineral properties expense | | | 1,278 | | | | (266 | ) | | | 1,012 | |
| Professional fees | | | 346 | | | | | | | | 346 | |
| Salaries | | | 469 | | | | | | | | 469 | |
| Salaries – stock-based compensation | | | 398 | | | | | | | | 398 | |
| Total expenses | | | 3,379 | | | | (339 | ) | | | 3,040 | |
| Other items | | | | | | | | | | | | |
| Interest and other income | | | (36 | ) | | | 1 | | | | (35 | ) |
| Loss from continuing operations | | | 3,343 | | | | (338 | ) | | | 3,005 | |
| Basic and diluted loss from continuing operations per common share | | $ | 0.03 | | | | | | | $ | 0.03 | |
| Weighted average number of common shares outstanding | | | 104,985,207 | | | | | | | | 104,985,207 | |
(See accompanying notes to the unaudited pro-forma consolidated financial statements)
Pro-Forma Consolidated
Statements of Loss and Comprehensive Loss
(Unaudited)
For the year ended November 30, 2015
in thousands of US dollars
| | | For the year ended
November 30, 2015
$ | | | Note 2(a)
$ | | | Pro-forma
$ | |
| Expenses | | | | | | | | | | | | |
| Amortization | | | 355 | | | | (63 | ) | | | 292 | |
| Foreign exchange loss | | | 26 | | | | (24 | ) | | | 2 | |
| General and administrative | | | 1,349 | | | | (4 | ) | | | 1,345 | |
| Investor relations | | | 88 | | | | | | | | 88 | |
| Mineral properties expense | | | 4,476 | | | | (309 | ) | | | 4,167 | |
| Professional fees | | | 1,346 | | | | | | | | 1,346 | |
| Salaries | | | 1,085 | | | | | | | | 1,085 | |
| Salaries – stock-based compensation | | | 831 | | | | | | | | 831 | |
| Total expenses | | | 9,556 | | | | (400 | ) | | | 9,156 | |
| Other items | | | | | | | | | | | | |
| Interest and other income | | | (24 | ) | | | 1 | | | | (23 | ) |
| Loss from continuing operations | | | 9,532 | | | | (399 | ) | | | 9,133 | |
| Basic and diluted loss from continuing operations per common share | | $ | 0.12 | | | | | | | $ | 0.11 | |
| Weighted average number of common shares outstanding | | | 80,312,913 | | | | | | | | 80,312,913 | |
(See accompanying notes to the unaudited pro-forma consolidated financial statements)
Notes to the Pro-Forma
Consolidated Financial Statements
(Unaudited)
NovaCopper Inc. (“NovaCopper” or the “Company”) is engaged in the exploration and development of mineral properties including the Arctic and Bornite Projects located in Northwest Alaska in the United States of America (“US”).
The accompanying unaudited pro-forma consolidated financial statements have been prepared for illustrative purposes to give effect to the disposition by NovaCopper of all of the issued and outstanding shares of Sunward Investments Limited. (“Sunward”) for consideration of 5,000,000 common shares of Brazil Resources Inc. (“BRI”) and 1,000,000 warrants exercisable into one common share of BRI for a period of two years from the closing date at an exercise price of Cdn$3.50. Sunward owns 100% of the Titiribi gold-copper exploration project located approximately 70 kilometers southwest of the city of Medellin, in Antioquia Department, Colombia. NovaCopper acquired Sunward and the Titiribi project as part of its acquisition of Sunward Resources Ltd. (“Sunward Resources”). The Company acquired Sunward Resources in a business combination which closed on June 19, 2015.
The NovaCopper financial statements include the results of Sunward Resources from the acquisition date of June 19, 2015. Accordingly, there is no pro-forma impact of the disposal transaction on periods prior to June 19, 2015. Beginning in the fourth quarter of fiscal 2016, the historical financial results of Sunward for periods prior to the disposition will be reflected in NovaCopper’s consolidated financial statements as discontinued operations.
The unaudited pro-forma consolidated balance sheet and the unaudited pro-forma consolidated statements of loss and comprehensive loss have been prepared, for illustrative purposes only, to give effect to the disposition of Sunward by NovaCopper pursuant to the assumptions described in note 2 and the accounting policies as disclosed in the financial statements of NovaCopper Inc.
In the opinion of management, the unaudited pro-forma consolidated balance sheet as at May 31, 2016, the unaudited pro-forma interim consolidated statements of loss and comprehensive loss for the six months ended May 31, 2016 and the unaudited pro-forma consolidated statements of loss and comprehensive loss for the year ended November 30, 2015 include the adjustments necessary for the fair presentation of the disposal transaction. Unaudited pro-forma consolidated statements of loss and comprehensive loss for the years ended November 30, 2014 and 2013 have not been provided as there is no impact of the disposal transaction prior to June 19, 2015.
The unaudited pro-forma consolidated financial statements are not necessarily indicative of what NovaCopper’s financial performance or financial position would have been had the disposition been effected on the dates indicated. The unaudited pro-forma consolidated financial statements should be read in conjunction with the audited consolidated financial statements of NovaCopper Inc. for the year ended November 30, 2015 and the unaudited consolidated interim financial statements of NovaCopper Inc. at May 31, 2016, all of which is available on SEDARwww.sedar.com.
Notes to the Pro-Forma
Consolidated Financial Statements
(Unaudited)
The unaudited pro-forma consolidated financial statements give effect to the disposition of Sunward which is to be accounted for as a discontinued operation. The anticipated nonrecurring after-tax gain on the sale is reflected in the pro-forma balance sheet, but not reflected in the pro-forma statements of loss and comprehensive loss. The unaudited pro-forma consolidated financial statements give effect to the disposition of Sunward, as if the disposition of Sunward had occurred as at May 31, 2016 for the purposes of the unaudited pro-forma consolidated balance sheet, and as of June 19, 2015, the date of acquisition of Sunward Resources, for the purposes of the unaudited pro-forma consolidated statements of loss and comprehensive loss and the following adjustments.
| (a) | The pro-forma adjustment represents the historical financial results of Sunward. |
| (b) | The pro-forma adjustment represents estimated consideration received from the sale of Sunward. Consideration includes 5,000,000 common shares of Brazil Resources Inc. (“BRI”) and 1,000,000 warrants exercisable into one common share of BRI for a period of two years from the closing date at an exercise price of Cdn$3.50. Of the 5,000,000 common shares of BRI, 2,500,000 common shares are subject to a holding period of six months from the closing date. |
The value of the 5,000,000 common shares of BRI was calculated based on the closing price of BRI on August 31, 2015 of Cdn$2.04, the date of last trading prior to the closing of the share purchase agreement. A closing exchange of 0.7624 US dollar per Canadian dollar on August 31, 2016 was used to convert the estimated consideration to US dollars. The total estimated value of the share consideration was $7.8 million.
The 1,000,000 BRI warrants were valued using the black-scholes as at August 31, 2016 resulting in an estimated value to the consideration received of $0.3 million. The estimated fair value of the warrants has been classified as a long term investment as the warrants are exercisable for a period of two years.
| (c) | The pro-forma adjustments represent the elimination of the assets and liabilities of Sunward. |
| (d) | Accrual of estimated transaction costs of NovaCopper of $103,000 which are expensed in the gain on disposition for accounting purposes. |
| (e) | The pro forma adjustment represents the estimated after-tax gain of approximately $4.4 million. |
