XML 25 R13.htm IDEA: XBRL DOCUMENT v3.26.1
Fair value accounting
 3 Months Ended
Feb. 28, 2026
Fair value accounting  
Fair value accounting

7)    Fair value accounting

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the significance of the inputs used in making the measurement. The three levels of the fair value hierarchy are as follows:

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 consist of cash and cash equivalents, accounts receivable, deposits, and accounts payable and accrued liabilities and the derivative liability. The fair value of the Company’s financial instruments other than derivative liability approximates their carrying value due to the short-term nature of their maturity. The Company’s financial instruments initially measured at fair value and  then held at amortized cost include cash and cash equivalents, accounts receivable, deposits, and accounts payable and accrued liabilities. The majority of the Company’s cash and cash equivalents is held with two Canadian Financial Institutions and is uninsured as at February 28, 2026.

The derivative liability representing the Company’s obligation to issue shares and warrants to the U.S. Department of War is carried at fair value on a recurring basis.  The fair value of the derivative liability is valued on the basis of Level 3 inputs.  The estimated fair value at February 28, 2026 of $32.2 million (November 2025 - $30.7 million) is based on the Company’s common stock price of $4.43 at that date, volatility of 81.5%, a risk-free rate of 3.63% and management’s estimate of the equal probability of completion and non-completion of the Ambler Access Project, which is beyond the control of the Company.  During the quarter ended February 28, 2026, the Company recorded a fair value loss of $1.5 million primarily reflecting a small increase in the Company’s share price in the period. A 10% change in the Company’s stock price affects the gain or loss on the derivative liability by approximately $5.0 million at February 28, 2026.  A 10% change in management’s estimate of the likelihood of completion affects the gain or loss on the derivative liability by approximately $1.3 million at February 28, 2026.