XML 79 R14.htm IDEA: XBRL DOCUMENT v3.25.0.1
INVESTMENTS
 12 Months Ended
Dec. 31, 2024
Fair Value Disclosures [Abstract]  
INVESTMENTS INVESTMENTS
Investment in Unconsolidated Affiliate
As of December 31, 2024, the Company has a 4.49% equity interest in the Donald Project JV to develop the Donald Project with Astron. The Donald Project is a well-known HMS and rare earth deposit operated by Astron that the Company believes could provide it with another near-term, large-scale source of monazite sand that would be transported to the Mill for the recovery of separated REE products. The Company has the option to earn up to a 49% interest in the Donald Project JV, in the event a positive FID is made. See Note 3 – Transactions for more information.
The Company's net loss includes its proportionate share of the net loss of the Donald Project JV. When the Company records its proportionate share of net loss, it increases equity loss of unconsolidated affiliates in the consolidated statements of operations and comprehensive income (loss) and reduces the carrying value of that investment on its balance sheet. The Company uses the equity method of accounting to account for its investments in the Donald Project JV because it exercises significant influence, but not control, over the entity. The Company's judgement regarding the level of influence over its equity investments includes
considering key factors such as its ownership interest, representation on the applicable Board of Directors and participation in policy-making decisions of the Donald Project JV. The Company's proportionate share of net loss was $0.18 million during the year ended December 31, 2024.
Investments without a Readily Determinable Fair Value
The Company's investments without a readily determinable fair value consist of its investments in Tate Transition Metals Ltd and Westland Mineral Sands Co Limited. The Company does not have significant influence over these investments.
The following table is a summary of the Company's investments:
December 31,
20242023
Investment in unconsolidated affiliate$12,921 $— 
Investments without readily determinable fair values2,969 1,356 
Total investments$15,890 $1,356 
FAIR VALUE ACCOUNTING
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
Fair value accounting utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 – Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and
Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).
The Company’s financial instruments include cash, cash equivalents, restricted cash, accounts receivable, accounts payable and current accrued liabilities. These instruments are carried at cost, which approximates fair value due to the short-term maturities of the instruments. Allowances for doubtful accounts are recorded against the accounts receivable balance to estimate net realizable value.
As of December 31, 2024 and 2023, the fair values of cash, restricted cash, short-term deposits, receivables, accounts payable and accrued liabilities approximate their carrying values because of the short-term nature of these instruments.
The Company’s investments in marketable equity securities are publicly traded stocks measured at fair value and classified within Level 1 and Level 2 in the fair value hierarchy. Level 1 marketable equity securities use quoted prices for identical assets in active markets, while Level 2 marketable equity securities utilize inputs based upon quoted prices for similar instruments in active markets. The Company’s investments in marketable debt securities are valued using quoted prices of a pricing service and, as such, are classified within Level 2 of the fair value hierarchy. The Company’s investments accounted for at fair value consisting of common shares are valued using quoted market prices in active markets and, as such, are classified within Level 1 of the fair value hierarchy. The Company’s investments include certain investments accounted for at fair value consisting of warrants are valued using the Black-Scholes option model based on observable inputs and, as such, are classified within Level 2 of the hierarchy.
The Company used the discounted cash flow approach, which is an income statement technique, to estimate the fair value of its contingent consideration payment to RadTran using an indicated discount rate of 10.2%, as of the acquisition date, August 16, 2024, and 7.7% as of December 31, 2024, which is based on significant inputs not observable in the market, and thus represents a Level 3 measurement within the fair value hierarchy.
The Convertible Note received as part of the Alta Mesa Transaction was valued as of February 14, 2023, upon closing, using a binomial lattice model. The fair value calculation used significant unobservable inputs within the Level 3 fair value hierarchy, including: (i) volatility 60%, and (ii) yield of 9.5%. Increases or decreases in the volatility and/or the selected yield can result in an increase or decrease in the fair value of the Convertible Note. Between February 14, 2023 and November 3, 2023, enCore early redeemed $40.00 million of the principal value of the Convertible Note. On November 9, 2023, the Company sold the remaining unpaid balance of $20 million owed under the secured Convertible Note for total consideration of $21.00 million plus $1.50 million in unpaid accrued interest, less a sales commission of $0.10 million paid to a third-party broker. As a result of enCore’s earlier pay-down and the $22.40 million received in connection with the sale of the Convertible Note, the Company received payment in full for the Alta Mesa Transaction, and no further consideration is owed in connection therewith.
The following tables set forth the fair value of the Company’s assets and liabilities measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
Level 1Level 2Level 3Total
December 31, 2024
Assets
Marketable debt securities$— $64,065 $— $64,065 
Marketable equity securities16,718 71 — 16,789 
Total assets$16,718 $64,136 $— $80,854 
Liabilities
Contingent consideration$— $— $1,764 $1,764 
December 31, 2023
Assets
Cash equivalents(1)
$— $40,512 $— $40,512 
Marketable debt securities— 107,466 — 107,466 
Marketable equity securities25,554 24 — 25,578 
Total assets$25,554 $148,002 $— $173,556 
(1)    Cash and cash equivalents are comprised of U.S. Treasury Bills, Government Agency Bonds, U.S. Non-Redeemable Term Deposits and mutual funds purchased within three months of their maturity date.
Changes in Level 3 Fair Value Measurements
The following table is a reconciliation of the beginning and ending balance recorded for the contingent consideration classified as Level 3 in the fair value hierarchy:
Beginning balance, August 16, 2024$1,690 
Increase to intellectual property74 
Ending balance, December 31, 2024$1,764