Convertible debt

6 Months Ended

Jun. 30, 2022

Convertible debt

Convertible debt

8.Convertible debt:

	Series 1		Series 2		VRB
	Convertible		Convertible		Convertible
	Notes (Note a)		Notes (Note a)		bond (Note b)		Total
Balance at December 31, 2021	$	54,975	$	—	$	23,857	$	78,832
Issuance of Series 2 Convertible Notes		—		86,200		—		86,200
Interest expense		—		—		1,022		1,022
Fair value adjustments		8,709		10,256		—		18,965
Conversion to common stock		(63,684)		(96,456)		—		(160,140)
Balance at June 30, 2022	$	—	$	—	$	24,879	$	24,879

(a) Ivanhoe Electric convertible notes

(i)   Series 1 Convertible Notes:

Between August 3, 2021 and November 17, 2021, the Company completed a financing which included the issuance of $50.0 million aggregate principal amount of unsecured convertible promissory notes (“Series 1 Convertible Notes”). Upon completion of the Company’s IPO on June 30, 2022, the Series 1 Convertible Notes, including accrued interest of $0.9 million, were automatically converted into 5,419,923 shares of common stock of the Company at a conversion price of $9.39 per share (Note 9).

(ii)  Series 2 Convertible Notes:

On April 5, 2022, the Company completed a financing in which it issued $86.2 million aggregate principal amount of unsecured convertible promissory notes (“Series 2 Convertible Notes”).

The Series 2 Convertible Notes were unsecured and bore interest at 3% per annum, in arrears and payable on the maturity date of July 31, 2023.

Upon completion of the Company’s IPO on June 30, 2022, the Series 2 Convertible Notes, including accrued interest of $0.6 million, were automatically converted into 8,209,035 shares of common stock of the Company at a conversion price of $10.58 per share being a 10% discount to the gross price per share at which common stock was sold in the IPO (Note 9).

The convertible notes along with their embedded features did not contain any equity components, and therefore were recognized as a liability on issuance. The Company elected to measure the convertible notes at fair value, with subsequent changes in fair value recorded in net loss.

(b)VRB Convertible bond:

On July 8, 2021, VRB issued a convertible bond for gross proceeds of $24.0 million. The bond has a five year term and interest accrues at a rate of 8% per annum.

The Company has accounted for the convertible bond as a debt instrument accounted at amortized cost.

The book value of the VRB convertible debt approximates fair value as VRB’s operations are early stage and there have been no significant changes to the business since the issuance date. The fair value determination is a level 3 assessment.