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RISK MANAGEMENT

3 Months Ended

Mar. 31, 2024

RISK MANAGEMENT

RISK MANAGEMENT

14.

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 United States 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
	$	$	$
March 31, 2024
Financial assets	257,507	1,422,059	60,851,427
Financial liabilities	(1,314,806)	(3,594,009)	(844,587)
Total exposure	(1,057,299)	(2,171,950)	60,006,840


	Short-term exposure		Long-term exposure
	USD	BWP	BWP
	$	$	$
December 31, 2023
Financial assets	2,576,180	755,386	54,082,922
Financial liabilities	(501,458)	(4,851,201)	(3,508,714)
Total exposure	2,074,722	(4,095,815)	50,574,208

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 three months ended March 31, 2024 and the year ended December 31, 2023, respectively.

If the CAD strengthened against the USD and BWP by 5%, respectively (December 31, 2023 – 5 %), it would have had the following impact:


	Short-term exposure		Long-term exposure
	USD	BWP	Total	BWP
	$	$	$	$
March 31, 2024	(52,865)	(108,598)	(161,462)	3,000,342
December 31, 2023	103,736	(204,791)	(101,055)	2,528,710

If the CAD weakened against the USD and BWP by 5%, respectively (December 31, 2023 – 5 %), it would have had the following impact:


	Short-term exposure		Long-term exposure
	USD	BWP	Total	BWP
	$	$	$	$
March 31, 2024	52,865	108,598	161,462	(3,000,342)
December 31, 2023	(103,736)	204,791	101,055	(2,528,710)

The higher foreign currency exchange rate sensitivity in profit at March 31, 2024 compared with December 31, 2023 is attributable to increased balances in financial assets and liabilities and 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 March 31, 2024:


	Less than
	1 year	1 - 2 years	2 - 5 years	Total
	$	$	$	$
Trade payables and accrued liabilities	3,756,692	—	—	3,756,692
Vehicle financing	95,054	95,054	21,176	211,284
Term Loan	2,088,235	2,088,235	21,404,412	25,580,882
Lease liabilities	1,319,863	—	—	1,319,863
	7,259,844	2,183,289	21,425,588	30,868,721

Deferred share units liability and provision for leave and severance are not presented in the above liquidity analysis as management considers it is not practical to allocate the amounts into maturity groupings.

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 and debt (vehicle financing, lease liabilities and Term Loan), net of cash.


	March 31, 2024	December 31, 2023
	$	$
Shareholder's equity (deficit)	650,881	9,745,686
Vehicle financing	211,284	236,124
Lease liabilities	1,319,863	1,611,143
Term Loan	18,197,327	17,956,423
	20,379,355	29,549,376
Cash	(9,366,821)	(19,245,628)
	11,012,534	10,303,748