On April 1, 2025, the Company closed the strategic investment of $250 million from fund entities managed by Orion, for the development and construction of Phase 1 of Thacker Pass (the “Orion Investment”).

At closing, Orion purchased senior unsecured convertible notes with an aggregate principal amount of $195,000 (the “Notes”) and entered into a Production Payment Agreement (“PPA”) whereby Orion paid the Company $25,000 in exchange for payments corresponding to the minerals processed and gross revenue generated by Thacker Pass. Under the PPA, Orion is entitled to fixed and variable production payments with respect to the first 41,500 tonnes of lithium processed at Thacker Pass each year, subject to certain adjustments.

At closing, Orion paid $217,075 (an aggregate initial investment of $220,000 less an original issuance discount of $2,925). Orion has committed to purchase an additional $30,000 in aggregate principal amount of Notes within two years (the "Delayed Draw Notes"), subject to the satisfaction of certain conditions precedent, upon request by the Company. As of June 30, 2025, the Company had not issued the Delayed Draw Notes.

Convertible Debt

The Notes accrue interest payable quarterly in arrears at an annual rate of 9.875%. Interest is payable in cash or by inclusion of such interest in the principal amount at the option of the Company. The Notes are convertible at the option of the holder at any time into the Company’s common shares prior to the maturity at an initial conversion price of $3.78 per share, subject to certain adjustments.

The conversion of Notes is settleable in common shares, subject to a cap (the “Conversion Cap”). Any excess of convertible shares over the Conversion Cap is settleable in cash, subject to a beneficial ownership limitation applicable to the holder at the time of conversion. As a result of this potential partial cash settlement feature, the conversion feature is accounted for as an embedded derivative (the “Embedded Derivative”), measured at fair value with changes in fair value recorded in the condensed consolidated statements of loss.

Principal and deferred interest on the Notes are due at maturity on April 1, 2030, unless redeemed or converted earlier. After October 1, 2027, the Company has the right to redeem the Notes at its option, subject to certain conditions.

The Company incurred transaction costs of $9,700 in connection with the closing of the Orion Investment. Total transaction costs were allocated on the same basis as the proceeds, including $4,274 to the Notes, $1,047 to the PPA, and $4,379 to the embedded derivative. Transaction costs allocated to the Notes and the PPA are amortized over the life of the obligation, using the effective interest rate method, whereas transaction costs allocated to the embedded derivative were expensed at closing. Unamortized transaction costs are deducted from the carrying value of Notes and PPA.

The effective interest was 26.2% and 29.0% for the Notes and PPA, respectively, for the three months ended June 30, 2025.

Production Payment Agreement and Royalty

Under the terms of the PPA, Orion will receive (i) fixed payments of $0.128 per tonne ($0.152 per tonne if the Delayed Draw Notes have been drawn) of the total lithium processed each year at Thacker Pass for a period of 72 quarters after first production, and (ii) variable payments of 0.96% (1.14% if the Delayed Draw Notes have been drawn) of total gross revenue in perpetuity, with the fixed and variable portions both applying to the first 41,500 tonnes of lithium processed each year, subject to certain adjustments relating to Thacker Pass total Phase 1 project costs. The production payments are also subject to certain adjustments relating to the tonnage of battery-grade lithium carbonate equivalent sold. The variable payments are also subject to certain adjustments related to the future price of lithium.

In addition, the Company is obligated under a separate 2013 royalty agreement to pay an 8% gross revenue royalty for sales on production from all Thacker Pass mineral claims up to a cumulative payment of $22,000, after which the royalty rate is reduced to 4% for the remaining life of the project. The Company has the option at any time to reduce the royalty to 1.75% through payment of $22,000. The portion of the royalty subject to repurchase has been recorded as a financial liability carried at amortized cost.