The following discussion and analysis should be read in conjunction with our unaudited condensed interim consolidated financial statements as of, and for the three months ended September 30, 2022, 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 in thousands 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 have been based upon our current business and operating plans, as approved by the Company's Board of Directors, and may include statements regarding our cash and other funding requirements and timing and sources thereof; results of feasibility studies; the accuracy of mineral resource and reserve estimates and assumptions on which they are based; the results of economic assessments and exploration activities; and current market conditions and project development plans, and the Transaction (as defined below). The material assumptions used to develop the forward-looking statements and forward-looking information included in this Quarterly Report on Form 10-Q include: our expectations of mineral prices; our forecasts and expected cash flows; our projected capital and operating costs; accuracy of mineral resource estimates and resource modeling and feasibility study results; expectations regarding mining and metallurgical recoveries; timing and reliability of sampling and assay data; anticipated political and social conditions; expected national and local government policies, including legal reforms; successful advancement of the Company's required permitting processes; and the ability to successfully raise additional capital; NioCorp and GXII (as defined below) being able to receive all required regulatory, third-party and shareholder approvals for the proposed Transaction; the amount of redemptions by GXII public stockholders; the execution of definitive agreements relating to the convertible debenture transaction and the standby equity purchase facility contemplated by the term sheets with Yorkville (as defined below); and other current estimates and assumptions regarding the proposed Transaction and its benefits.

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:





                                       15




Risks Related to Our Business:





  ? risks related to our ability to operate as a going concern;


  ? risks related to our requirement of significant additional capital;


  ? risks related to our limited operating history;


  ? risks related to our history of losses;


    ?   risks related to the restatement of our consolidated financial statements
        with respect to the Affected Periods and the impact of such restatement on
        our future financial statements and other financial measures;
    ?   risks related to the material weakness in our internal control over
        financial reporting, our efforts to remediate such material weakness and
        the timing of remediation;
    ?   risks related to cost increases for our exploration and, if warranted,
        development projects;


    ?   risks related to a disruption in, or failure of, our information
        technology systems, including those related to cybersecurity;
    ?   risks related to equipment and supply shortages;
    ?   risks related to current and future offtake agreements, joint ventures,
        and partnerships;
    ?   risks related to our ability to attract qualified management;
    ?   risks related to the effects of the COVID-19 pandemic or other global
        health crises on our business plans, financial condition and liquidity;
        and
    ?   risks related to the ability to enforce judgment against certain of our
        directors.



Risks Related to Mining and Exploration:





  ? risks related to estimates of mineral resources and reserves;


  ? risks related to mineral exploration and production activities;


  ? risks related to our lack of mineral production from our properties;


  ? risks related to the results of our metallurgical testing;


    ?   risks related to the price volatility of commodities;
    ?   risks related to the establishment of a reserve and resource for Rare
        Earth Elements ("REEs" or "Rare Earths") and the development of a viable
        recovery process for REEs;
    ?   risks related to the estimation of mineral resources and mineral reserves;


  ? risks related to changes in mineral resource and reserve estimates;


    ?   risks related to competition in the mining industry;
    ?   risks related to the management of the water balance at our Elk Creek
        Project;
    ?   risks related to claims on the title to our properties;
    ?   risks related to potential future litigation; and
    ?   risks related to our lack of insurance covering all our operations.



Risks Related to Government Regulations:





    ?   risks related to our ability to obtain or renew permits and licenses for
        production;


    ?   risks related to government and environmental regulations that may
        increase our costs of doing business or restrict our operations;
    ?   risks related to changes in federal and/or state laws that may
        significantly affect the mining industry;
    ?   risks related to the impacts of climate change, as well as actions taken
        or required by governments related to strengthening resilience in the face
        of potential impacts from climate change; and


  ? risks related to land reclamation requirements.




                                       16





Risks Related to Our Debt:



    ?   risks related to covenants contained in agreements with our secured
        creditors that may affect our assets; and


    ?   risks related to the extent to which our level of indebtedness may impair
        our ability to obtain additional financing.



Risks Related to Our Common Shares:





    ?   risks related to qualifying as a "passive foreign investment company"
        under the U.S. Internal Revenue Code of 1986, as amended; and


    ?   risks related to our Common Shares, including price volatility, lack of
        dividend payments, dilution and penny stock rules.



Risks Related to the Proposed Transaction





    ?   risks related to the amount of any redemptions by GXII public stockholders
        being greater than expected, which may reduce the cash in trust available
        to NioCorp upon the consummation of the Transaction;



    ?   risks related to the occurrence of any event, change or other
        circumstances that could give rise to the termination of the Business
        Combination Agreement (as defined below) and/or payment of the termination
        fees;



    ?   risks related to the outcome of any legal proceedings that may be
        instituted against NioCorp or GXII following announcement of the Business
        Combination Agreement and the Transaction;



    ?   risks related to the inability to complete the Transaction due to, among
        other things, the failure to obtain NioCorp shareholder approval or GXII
        stockholder approval or the execution of definitive agreements relating to
        the convertible debenture transaction and the standby equity purchase
        facility contemplated by the term sheets with Yorkville;



    ?   the risk that the announcement and consummation of the Transaction
        disrupts NioCorp's current plans;



    ?   risks relating to the ability to recognize the anticipated benefits of the
        Transaction;



    ?   risks relating to unexpected costs related to the Transaction; and

    ?   the risks that the consummation of the Transaction is substantially
        delayed or does not occur, including prior to the date on which GXII is
        required to liquidate under the terms of its charter documents.



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/A for the fiscal year ended June 30, 2022, as well as other factors described elsewhere in this report and the Company's other reports filed with the 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 management as of the date of this report. The Company does not assume any obligation to update forward-looking statements if circumstances or management'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.





                                       17





Qualified Person


All technical and scientific information included in this Quarterly Report on Form 10-Q derived from the June 2022 Elk Creek Project feasibility study prepared by qualified persons (within the meaning of both National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") and subpart 1300 of Regulation S-K ("S-K 1300"), as applicable) has been reviewed and approved by Scott Honan, M.Sc., SME-RM, NioCorp's Chief Operating Officer. Mr. Honan is a "Qualified Person" as such term is defined in NI 43-101 and S-K 1300.





Company Overview


NioCorp is developing the Elk Creek Project, located in southeast Nebraska. The Elk Creek Project is an advanced Niobium ("Nb"), Scandium ("Sc") and Titanium ("Ti") development stage property. The Company is evaluating the potential to produce several Rare Earth byproducts from the Elk Creek 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 automobiles, bridges, structural systems, buildings, pipelines, and other applications that generally increases strength and/or reduces weight, 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 high-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. Rare Earths are critical to electrification and decarbonization initiatives and can be used to manufacture the strongest permanent magnets commercially available.

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.





Recent Corporate Events



On September 25, 2022, the Company, GXII, and Merger Sub, entered into the Business Combination Agreement. Pursuant to the Business Combination Agreement, as the result of a series of transactions, GXII will become a subsidiary of the Company (as successor by merger to the Company's subsidiary, ECRC), with the pre-combination public shareholders of GXII receiving Common Shares based on the Exchange Ratio of 11.1829212 Common Shares for each GXII Class A common share held and not redeemed, and the GXII founders receiving shares in GXII (as successor by merger to ECRC) based on the Exchange Ratio. Pursuant to the Business Combination Agreement, after closing, the GXII founders will have the right to exchange such shares for Common Shares on a one-for-one basis under certain conditions. Pursuant to the Business Combination Agreement, the Company will also assume the obligations under the issued and outstanding GXII warrants, which will be converted into warrants exercisable into Common Shares following closing of the Transaction. The Business Combination Agreement contemplates that the Company will undertake a reverse stock split of the Common Shares at the time of close in connection with an expected cross-listing to Nasdaq. In addition, pursuant to the Business Combination Agreement, post-closing, the Company's Board will include two directors from pre-combination GXII. The transactions contemplated by the Business Combination Agreement and the ancillary agreements thereto are referred to collectively as the "Transaction."

The business combination pursuant to the Business Combination Agreement will be accounted for as a recapitalization in accordance with GAAP. Under this method of accounting, GXII will be treated as the "acquired" company for financial reporting purposes. Accordingly, the transaction is treated as the equivalent of NioCorp issuing Common Shares for the net assets of GXII, accompanied by a recapitalization. The net assets of GXII will be stated at historical cost, with no goodwill or other intangible assets recorded.

In addition, in connection with the entry into the Business Combination Agreement, the Company announced the signing of non-binding LOIs for two separate financing packages with Yorkville. Subject to entering into definitive agreements, these financings could provide the Company with access to up to an additional $81.0 million to help advance the Elk Creek Project. The financings contemplated by the LOIs include $16.0 million in convertible debentures that are expected to be funded at the closing of the Transaction, and subject to certain limitations can be



                                       18




repaid by the Company in either cash or Common Shares, and a standby equity purchase facility pursuant to which the Company will have the ability to require Yorkville, subject to the conditions set out in the definitive agreements, to purchase up to $65.0 million of its Common Shares.

The proposed Transaction is expected to close in the first calendar quarter of 2023, subject to the satisfaction or waiver of certain customary closing conditions contained in the Business Combination Agreement, including, among other things, (i) obtaining required approvals of the Transaction and related matters by the respective shareholders of NioCorp and GXII, (ii) the effectiveness of the registration statement on Form S-4 that the Company originally filed on November 7, 2022, (iii) receipt of approval for listing on Nasdaq of the NioCorp Common Shares to be issued in connection with the Transaction, (iv) receipt of approval for listing on Nasdaq of the NioCorp warrants to be issued in exchange for the GXII warrants that NioCorp has agreed to assume, (v) receipt of approval from the TSX with respect to the issuance and listing of the NioCorp Common Shares issuable in connection with the Transaction, (vi) that NioCorp and its subsidiaries (including GXII, as successor by merger to ECRC) will have at least $5.000001 million of net tangible assets upon the consummation of the Transaction, after giving effect to any redemptions by GXII public stockholders and after payment of underwriters' fees or commissions, (vii) that, at closing, NioCorp and its subsidiaries (including GXII, as successor by merger to ECRC) will have received cash in an amount equal to or greater than $15.0 million, subject to certain adjustments, and (viii) the absence of any injunctions enjoining or prohibiting the consummation of the Business Combination Agreement. The proposed additional financings contemplated by the LOIs will also be subject to the approval of the TSX and the Company's shareholders.

Final proceeds will depend upon redemption rates of current GXII shareholders at the consummation of the proposed Transaction. In connection with the closing of the Transaction, a significant number of GXII shareholders may exercise their redemption rights. See Part II, Item 1A, "Risk Factors-If the Transaction is consummated, the combined company may not realize all or any of the anticipated benefits expected as a result of the Transaction."





Elk Creek Project Update


On September 6, 2022, the Company announced that it filed with the SEC a Technical Report Summary ("TRS") based on the Company's 2022 Feasibility Study for the Elk Creek Critical Minerals Project. The TRS was filed with the SEC to comply with Item 601(b)(96) and S-K 1300, which regulates disclosure of Mineral Resources and Mineral Reserves. A companion Technical Report for Canadian purposes, pursuant to National Instrument 43-101 ("NI 43-101"), was filed by NioCorp on SEDAR on June 28, 2022. The technical data and economic conclusions of these reports are substantively identical, with minor differences between the reports resulting only from the respective disclosure requirements of S-K 1300 and NI 43-101.

On September 6, 2022, the Company announced that its demonstration-scale processing plant (the "demonstration plant") in Quebec, Canada had commenced a three-tonne sample of representative ore from the Elk Creek Project. The demonstration plant project is intended to demonstrate that the Company can extract and separate rare earth elements from ore that NioCorp expects to mine from the Project site, subject to receipt of necessary project financing, and that its simplified process for potentially producing niobium, scandium, and titanium is technically and economically feasible.

The demonstration plant will process Elk Creek ore samples in three phases.

? Phase 1 is designed to demonstrate a new approach to the initial processing of

the ore that NioCorp expects to mine from the Project site, subject to receipt

of necessary project funding, including calcination, initial leaching, and rare

earth extraction;

? Phase 2 is designed to demonstrate an improved process for the second stage of

leaching along with Niobium and Titanium separation; and

? Phase 3 is designed to demonstrate the technical viability of separating

high-purity versions of several target magnetic rare earth products from Elk

Creek ore samples, as well as confirming previously achieved high recovery

rates for high-purity Scandium trioxide.

The potential magnetic rare earth products include Neodymium-Praseodymium ("NdPr") oxide, Dysprosium oxide, and Terbium oxide. NioCorp will utilize conventional solvent extraction ("SX") technology to test a rare earth separation approach developed by NioCorp and L3 Process Innovation ("L3").





                                       19




On October 25, 2022, the Company announced that its demonstration plant had completed demonstrating its planned process for removing calcium and magnesium from ore obtained from the Elk Creek Project. This positive result, which is part of Phase I operations of the demonstration plant, is a key milestone in NioCorp's proposed optimization of its process flow sheet for the Project, which was designed by L3 and NioCorp.

The well-known and time-tested process NioCorp is employing to remove calcium and magnesium carbonates from the ore using thermal treatment and leaching is part of the demonstration plant's Phase I flowsheet. This step operated successfully, and the removed calcium and magnesium were produced at demonstration scale as a mixed calcium and magnesium carbonate. Removing carbonate minerals in this fashion is expected to reduce the size of the follow-on planned production steps and make them more efficient. Characterization of the calcium and magnesium carbonate from the completed demonstration plant production runs has demonstrated very low levels of impurities, and an overall 99% purity of the mixed calcium-magnesium carbonate. Phase I demonstration plant operations will continue with calcination and a ramp-up of leaching operations as testwork and assembly of Phase II and Phase III of the demonstration plant's planned operations proceed in parallel.





Other Activities


Our long-term financing efforts continued during the quarter ended September 30, 2022, including the proposed Transaction, discussed above. As funds become available through the Company's fundraising efforts, we expect to undertake the following activities:





    ?   Continuation of the Company's efforts to secure federal, state and local
        permits;
    ?   Continued evaluation of the potential to produce Rare Earth products;


    ?   Negotiation and completion of offtake agreements for the remaining
        uncommitted production from the project;
    ?   Negotiation and completion of engineering, procurement and construction
        agreements;


    ?   Completion of the final detailed engineering for the underground portion
        of the Elk Creek Project;


    ?   Initiation and completion of the final detailed engineering for surface
        project facilities;


    ?   Construction of natural gas and electrical infrastructure under existing
        agreements to serve the Elk Creek Project site;


    ?   Completion of water supply agreements and related infrastructure to
        deliver fresh water to the project site;


    ?   Initiation of revised mine groundwater investigation and control
        activities;
    ?   Land clearing operations intended to prepare property owned by ECRC for
        the commencement of project construction,
    ?   Initiation of long-lead equipment procurement activities; and


    ?   Operation of a small-scale demonstration plant to address process
        recommendations contained in the NI 43-101 technical report for the Elk
        Creek Project filed on SEDAR on May 29, 2019 and to quantify REE
        metallurgical performance.




                                       20




Financial and Operating Results

The Company has no revenues from mining operations. Operating expenses incurred related primarily to performing exploration activities, as well as the activities necessary to support corporate and shareholder duties, and are detailed in the following table.





                                     For the Three Months
                                      Ended September 30,
                                      2022            2021
Operating expenses
Employee-related costs             $       293       $   319
Professional fees                          164            90
Exploration expenditures                 1,288           621
Other operating expenses                   337           226
Total operating expenses                 2,082         1,256

Foreign exchange loss                      173           225
Interest expense                           300           605
Loss (gain) on equity securities            (1 )           2
Income tax benefit                           -             -
Net loss                           $     2,554       $ 2,088

Three months ended September 30, 2022 compared to three months ended September 30, 2021

Significant items affecting operating expenses are noted below:

Employee-related costs decreased in 2022 as compared to 2021 due to timing of the retirement of our general counsel in the second quarter of fiscal 2021.

Professional fees increased in 2022 as compared to 2021, primarily due to the timing of legal services related to the TRS filed with the SEC on September 6, 2022.

Exploration expenditures increased in 2022 as compared to 2021, primarily due to the timing of demonstration plant development and start-up costs incurred in 2022, as well as costs related to the completion and filing of the TRS filed with the SEC on September 6, 2022.

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 2022 as compared to 2021 primarily due to increased financial advisory fees and investor relations fees associated with our ongoing financing efforts.

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

Foreign exchange loss is primarily due to changes in the U.S. dollar against the Canadian dollar and reflects the timing of foreign currency transactions, primarily U.S. dollar-based related party loans, and subsequent changes in exchange rates. The decline in foreign exchange loss during 2022 as compared 2021 is due to a declining U.S. dollar-based debt balance, partially offset by increased foreign exchange rates in 2022.

Interest expense decreased in 2022 as compared to 2021 due to the impacts of conversions on the outstanding balance of the Lind III Convertible Security.

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 stock options and share purchase warrants, and related party loans.





                                       21




As of September 30, 2022, the Company had cash of $3.2 million and a working capital deficit of $3.1 million, compared to cash of $5.3 million and working capital surplus of $0.6 million on June 30, 2022.

We expect that the Company will operate at a loss for the foreseeable future. The Company's current planned cash needs are approximately $16.0 million until June 30, 2023. In addition to outstanding accounts payable and short-term liabilities, our average monthly planned expenditures are approximately $1,125 per month where approximately $475 is for corporate overhead and estimated costs related to securing financing necessary for advancement of the Elk Creek Project. Approximately $650 per month is planned for expenditures relating to the advancement of Elk Creek Project by NioCorp's wholly 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 to continue to fund basic operations for the next twelve months, and additional funds totaling $12.0 million to $13.5 million are likely to be necessary to continue advancing the project in the areas of financing, permitting, and detailed engineering. 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 lease commitments are $6 until June 30, 2023. 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, 2023, 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 September 25, 2022, the Company, GXII and Merger Sub entered into the Business Combination Agreement. The NioCorp Board considered a number of factors as generally supporting its decision to enter into the Business Combination Agreement, including, but not limited to, the following material factors:





  ? Anticipated Acceleration of Financing Efforts. The Transaction has the
    potential to (1) provide NioCorp with up to $285.0 million in net cash
    proceeds at the consummation of the Transaction, depending upon the amount of
    redemptions by GXII public stockholders, and up to an additional $81.0 million
    over the next three years (as further discussed below), depending on the
    consummation of other additional financing arrangements that NioCorp and GXII
    intend to pursue prior to and following the expected closing of the
    Transaction and (2) significantly accelerate NioCorp's efforts to obtain the
    required Elk Creek Project financing by increasing exposure to institutional
    investors looking to make strategic investments in critical minerals plays
    that are crucial to the world's clean energy transition;



  ? Non-Binding Yorkville Term Sheets. The signing of non-binding LOIs for two
    separate financing packages with Yorkville, where, subject to entering into
    definitive agreements, such financings could provide NioCorp with access to up
    to an additional $81.0 million to help advance the Elk Creek Project. The
    financings contemplated by the LOIs include $16.0 million in convertible
    debentures that are expected to be funded at the closing of the Transaction,
    and subject to certain limitations can be repaid by NioCorp in either cash or
    NioCorp Common Shares, and a standby equity purchase facility pursuant to
    which NioCorp will have the ability to require Yorkville, subject to the
    conditions set out in the definitive agreements, to purchase up to $65.0
    million of NioCorp Common Shares;



  ? Anticipated Benefits of Nasdaq Listing. A listing on Nasdaq, which is an
    established national exchange in the United States, would provide broader
    access to capital and financing alternatives and would otherwise enhance
    NioCorp's public profile; and



  ? Minimum Cash Condition. The consummation of the Transaction is subject to the
    satisfaction or waiver of certain closing conditions contained in the Business
    Combination Agreement, including, among other things, that, at the closing,
    NioCorp and its subsidiaries (including GXII, as successor by merger to ECRC)
    will have received cash in an amount equal to or greater than $15.0 million,
    subject to certain adjustments.




                                       22




The NioCorp Board also considered a variety of uncertainties and risks and other potentially negative factors concerning the Transaction, including, but not limited to, the following:

? Risks of Failure to Complete the Transaction. The risks that:

o the Transaction may not be completed despite the parties' efforts, including

the possibility that the conditions to the parties' obligations to complete the

Transaction (which include certain conditions that are not within the control

of the parties to the Business Combination Agreement) may not be satisfied or

that completion of the Transaction may be unduly delayed, and any resulting

adverse impacts on NioCorp, its business and the trading price of NioCorp

Common Shares;

o the circumstances under which the Business Combination Agreement could be

terminated and the impact of such termination, including the requirement that

NioCorp must pay GXII (1) a Base Termination Fee of $15.0 million if it

terminates the Business Combination Agreement in order to enter into an

agreement providing for a Superior Proposal (as defined in the Business

Combination Agreement), for a change of recommendation of the NioCorp Board, or

a material breach of certain of NioCorp's covenants relating to soliciting

acquisition proposals or (2) an Intentional Breach Termination Fee of $25.0

million if GXII terminates the Business Combination Agreement as a result of a

willful and material breach by NioCorp or as a result of NioCorp's failure to

consummate the closing of the Transaction within five business days after all

the conditions to closing have been satisfied;

o if GXII is entitled to the Base Termination Fee or the Intentional Breach

Termination Fee upon termination of the Business Combination Agreement, NioCorp

is also required to pay all documented and reasonable out-of-pocket expenses

paid or payable by GXII and its sponsor in connection with the Business

Combination Agreement and the Transaction, not to exceed $5.0 million; and

o the substantial costs to be incurred in connection with the Transaction,

including those incurred regardless of whether the Transaction are completed;

? Risks Relating to the Benefits of the Transaction. The risks of:

o not realizing all the anticipated benefits expected as a result of the

Transaction, including the anticipated acceleration of its financing efforts

and the benefits of the expected Nasdaq listing, and that general economic and

market conditions outside the control of the parties to the Business

Combination Agreement could deteriorate, any of which could result in NioCorp

being unable to achieve the financing necessary to advance, complete

construction and commence operation of the Elk Creek Project; and

o the substantial costs to be incurred in connection with the Transaction,

including those incurred regardless of whether the anticipated benefits of the

Transaction are realized;

? Risks Relating to the Financing. The absence of committed financing and that

the parties may not be able to negotiate definitive documentation related to

the Yorkville LOIs or may not otherwise be able to consummate the financing

transactions contemplated thereby, which could cause NioCorp to encounter

difficulties in completing the Transaction with financing terms as favorable as

anticipated or at all; and

? Restrictions on the Conduct of Business. The Business Combination Agreement

places certain restrictions on the conduct of the NioCorp business prior to the

consummation of the Transaction and other alternatives reasonably available to

NioCorp if it did not pursue the Transaction, including continuing to pursue

alternative financing arrangements.

Except as set forth above, we currently have no further funding commitments or arrangements for additional financing at this time, other than the potential exercise of options and warrants, and there is no assurance that we will be able to obtain any such additional financing on acceptable terms, if at all. Notwithstanding the restrictions set forth in the Business Combination Agreement, there is significant uncertainty that we would be able to secure any



                                       23



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. In addition to the proposed Transaction and subject to receipt of the consent of GXII as may be required pursuant to the Business Combination Agreement, management may 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 equity lines of credit or public offerings in the form of underwritten/brokered offerings, at-the-market 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 the impacts of the COVID-19 pandemic 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 financial statements for the year ended June 30, 2022, disclose that substantial doubt exists as to our ability to continue in business. The financial statements included in this Quarterly Report on Form 10-Q have been prepared under the assumption that we will continue as a going concern. We are a development stage issuer and we have incurred losses since our inception. We may not have sufficient cash to fund normal operations and meet debt obligations for the next twelve months without deferring payment on certain current liabilities and raising additional funds. The COVID-19 pandemic and other recent worldwide events have created general global economic uncertainty as well as uncertainty in capital markets, supply chain disruptions, increased interest rates, and the potential for geographic recessions. During fiscal year 2022 and continuing into 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 United States 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.





Operating Activities


During the three months ended September 30, 2022, the Company's operating activities consumed $1.7 million of cash (2021: $1.6 million). The cash used in operating activities for the three months ended September 30, 2022, reflects the Company's funding of losses of $2.6 million, partially offset by the accretion of convertible debt and other non-cash transactions. Overall, operational outflows during the three months ended September 30, 2022, increased slightly from the corresponding period of 2021 due to an increase in exploration-related spending at the Elk Creek Project. Going forward, the Company's working capital requirements are expected to increase substantially in connection with the development of the Elk Creek Project.





Financing Activities


Financing inflows were nil during the three months ended September 30, 2022, as compared to $0.3 million during the corresponding period in 2021, primarily reflecting the timing of warrant and option exercises during 2021.





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Cash Flow Considerations


The Company has historically relied upon debt and equity financings to finance its activities. 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.

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, including the impacts of the COVID-19 pandemic on the timing and availability of funding, 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.





Critical Accounting Estimates



There have been no material changes in our critical accounting estimates discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" under the heading "Critical Accounting Estimates and Recent Accounting Pronouncements" as of June 30, 2022, in our Annual Report on Form 10-K/A for the fiscal year ended June 30, 2022.

Certain U.S. Federal Income Tax Considerations

NioCorp believes that it qualified as a "passive foreign investment company" ("PFIC") as defined under Section 1297 of the U.S. Internal Revenue Code of 1986, as amended, in recent years, including its taxable years ended June 30, 2022 and June 30, 2021. However, based on the current composition of its income and assets, as well as current business plans and financial expectations, NioCorp does not currently expect to be treated as a PFIC for its taxable year or foreseeable future taxable years. However, this conclusion is a factual determination that must be made annually at the close of each taxable year and, thus, is subject to change. In addition, it is possible notwithstanding NioCorp's conclusion that the IRS could assert, and that a court could sustain, a determination that NioCorp is a PFIC. Accordingly, there can be no assurance that NioCorp (or any of its subsidiaries) will not be treated as a PFIC for any taxable year. Current and prospective United States shareholders should consult their tax advisors as to the tax consequences of PFIC classification and the U.S. federal tax treatment of PFICs. Additional information on this matter is included in the "Risk Factors" section of the Company's Annual Report on Form 10-K/A for the fiscal year ended June 30, 2022, under the heading "Risks Related to the Common Shares."





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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 November 14, 2022, is set out below, on a fully-diluted basis.





                  Common Shares Outstanding
                            (fully diluted)
Common Shares                   279,450,884
Stock options1                   14,364,000
Warrants1                        18,516,253
Convertible Debt2                 1,155,200


1 Each exercisable into one Common Share

2 Represents Common Shares issuable on conversion of aggregate outstanding

principal amounts of $0.8 million of convertible debt as of November 14, 2022,

assuming a market price per Common Share of $0.81 on that date.

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