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RISK MANAGEMENT

9 Months Ended

Sep. 30, 2023

15. RISK MANAGEMENT

The Company’s exposure to market risk includes, but is not limited to, the following risks:

Interest Rate Risk

Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not subject to significant changes in interest rates.

Foreign Currency Exchange Rate Risk

Currency risk is risk that the fair value of future cash flows will fluctuate because of changes in foreign currency exchange rates. In addition, the value of cash and other financial assets and liabilities denominated in foreign currencies can fluctuate with changes in currency exchange rates.

The Company primarily operates in Canada, Barbados and Botswana and undertakes transactions denominated in foreign currencies such as US dollar and Botswana Pula, and consequently is exposed to exchange rate risks. Exchange risks are managed by matching levels of foreign currency balances and related obligations and by maintaining operating cash accounts in non-Canadian dollar currencies.

Foreign currency denominated financial assets and liabilities which expose the Company to currency risk are disclosed below. The amount shown are those reported and translated into CAD at the closing rate.

	Short -term exposure						Long-term exposure
	USD			BWP			BWP

September 30, 2023
Financial assets		2,295,217			2,070,323			46,041,682
Financial liabilities		(358,713	)		(2,285,426	)		(4,681,513	)
Total exposure		1,936,504			(215,103	)		41,360,170

	Short -term exposure						Long-term exposure
	USD			BWP			BWP

December 31, 2022
Financial assets		2,834,303			473,980			32,058,793
Financial liabilities		(1,246,825	)		(2,176,110	)		(1,530,341	)
Total exposure		1,587,478			(1,702,130	)		30,528,452

The following table illustrates the sensitivity of net loss in relation to the Company’s financial assets and financial liabilities and the USD/CAD exchange rate and BWP/CAD exchange rate, all other things being equal. It assumes a +/- 5% change of the USD/CAD and BWP/CAD exchange rates for the nine months ended September 30, 2023 and the year ended December 31, 2022, respectively.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

(Expressed in Canadian dollars)

If the CAD strengthened against the USD and BWP by 5%, respectively (December 31, 2022 – 5 %), it would have had the following impact:

SCHEDULE OF CHANGES IN EXCHANGE RATES

	Profit for the year								Long-term exposure profit for the year
	USD		BWP			Total			BWP
September 30, 2023		96,825		(10,755	)		86,070			2,068,008
December 31, 2022		79,374		(85,106	)		(5,732	)		1,526,423

If the CAD weakened against the USD and BWP by 5%, respectively (December 31, 2022 – 5 %), it would have had the following impact:

	Profit for the year								Long-term exposure profit for the year
	USD			BWP		Total			BWP
September 30, 2023		(96,825	)		10,755		(86,070	)		(2,068,008	)
December 31, 2022		(79,374	)		85,106		5,732			(1,526,423	)

The higher foreign currency exchange rate sensitivity in profit at September 30, 2023 compared with December 31, 2022 is attributable to fluctuations in foreign exchange rates, BWP and USD in relation to CAD.

Credit Risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The credit risk is primarily associated with liquid financial assets. The Company limits exposure to credit risk on liquid financial assets by holding cash at highly-rated financial institutions.

Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Company manages the liquidity risk inherent in these financial obligations by regularly monitoring actual cash flows to annual budget which forecast cash and expected cash availability to meet future obligations.

The Company will defer discretionary expenditures, as required, in order to manage and conserve cash required for current liabilities.

The following table shows the Company’s contractual obligations as at September 30, 2023:

SCHEDULE OF CONTRACTUAL OBLIGATIONS

	Less than 1 year		1 - 2 years		2 - 5 years		Total
Trade payables and accrued liabilities		3,148,177		-		-		3,148,177
Vehicle financing		16,147		64,590		84,282		165,019
Term loan		-		-		12,856,979		12,856,979
Lease liability		1,892,504				-		1,892,504
Total		5,056,828		64,590		12,941,261		18,062,679

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023

(Expressed in Canadian dollars)

Capital Risk Management

The Company manages its capital to ensure that it will be able to continue as a going concern, so that adequate funds are available or are scheduled to be raised to meet its ongoing administrative and operating costs and obligations. This is achieved by the Board of Directors’ review and ultimate approval of budgets that are achievable within existing resources, and the timely matching and release of the next stage of expenditures with the resources made available from capital raises and debt funding from related or other parties. In doing so, the Company may issue new shares, restructure or issue new debt.

The Company is not subject to any externally imposed capital requirements imposed by a regulator or a lending institution.

In the management of capital, the Company includes the components of equity, loans and borrowings, and other current liabilities, net of cash.

	September 30, 2023			December 31, 2022
Shareholder’s equity		39,555,251			27,188,344
Current liabilities		5,040,681			12,462,372
Total liabilities and equity		44,595,932			39,650,716
Cash		(8,853,296	)		(5,162,991	)
Total		35,742,636			34,487,725