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8. RIGHT-OF-USE ASSET AND LEASE LIABILITY | 9 Months Ended
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Sep. 30, 2025
Notes |
8. RIGHT-OF-USE ASSET AND LEASE LIABILITY | `8.`RIGHT-OF-USE ASSET AND LEASE LIABILITY The Company currently leases office space, which are classified as operating leases, and leases remote camp accommodations which are classified as finance leases under ASC 842. The components of operating lease expense, associated with the Company’s leasing of office space, consisted of amortization of the right-of-use asset of $58,089 and $52,455 during the nine months ended September 30, 2025 and 2024, respectively, and accretion of the lease liability of $6,411 and $12,045 for the nine months ended September 30, 2025 and 2024, respectively. The weighted average remaining lease term in years was .67 and 1.67 as of September 30, 2025 and 2024, respectively. The weighted average discount rate as of September, 2025, and 2024, was 10.25%. Amortization expense on operating leases is included as part of general and administrative expenses on the income statement. The total lease expense recognized on the income statement is the sum of the accretion of the lease liability and amortization expense. This total expense reflects the cost of using the leased asset over the lease term. The following table reconciles the undiscounted future cash flows for the next five years and thereafter to the operating lease liabilities recorded within the condensed consolidated balance sheet as of September 30, 2025:
2025 (Remainder) | $22,139
2026 | 36,898
Total lease payments | 59,037
Less: amounts representing interest | (1,721)
Present value of lease liabilities | $57,316
The Company previously leased remote accommodation camps under finance lease agreements. During the third quarter of 2025, the Company terminated its fiancé lease arrangement, and all associated right-of-use assets and lease liabilities were fully derecognized as of September 30, 2025. No termination payments were made in connection with the early termination. The components of finance lease expense, associated with the Company’s leasing of remote accommodation camps, consisted of amortization of the right-of-use asset of $65,285 and $90,421 during the nine months ended September 30, 2025 and 2024, respectively, and accretion of the lease liability of $2,357 and $11,042 during the nine months ended September 30, 2025 and 2024, respectively. The weighted average remaining lease term in years was 0 and 1 as of September 30, 2025 and 2024, respectively. The weighted average discount rate as of September 30, 2025, was 10.25%. Amortization expense on financing leases is included as part of general and administrative expenses on the statement of operations. The total lease expense recognized on the statement of operations is the sum of the accretion of the lease liability and amortization expense. This total expense reflects the cost of using the leased asset over the lease term. Included in the total lease payments are approximately $36,837 in demobilization costs associated with the decommissioning and removal of the remote accommodation camps at the end of the lease term. These costs have been capitalized as part of the lease liability and right-of-use asset and were recognized over the term of the lease.

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- Definition The entire disclosure for lessee entity's leasing arrangements including, but not limited to, all of the following: (a.) The basis on which contingent rental payments are determined, (b.) The existence and terms of renewal or purchase options and escalation clauses, (c.) Restrictions imposed by lease agreements, such as those concerning dividends, additional debt, and further leasing. + References Reference 1: http://fasb.org/us-gaap/role/ref/otherTransitionRef -Topic 840 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/840/tableOfContent + Details
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