Annual Report 2008
Tsodilo Resources Limiteed
President’s Message
Fellow Shareholders,
On behalf of the board of directors, I am pleased to provide
Tsodilo has a 94% interest in our Botswana Newdico (Pty)
this report of Tsodilo Resources Limited (“Tsodilo” or the
Limited project and a 100% interest in our Botswana
“Company”) progress together with the audited financials
Gcwihaba Resources (Pty) Limited projects.
for the year ended December 31, 2008.
December of 2008, if not most of 2008, will be a period
we will all remember for some time. The revelation that
the United States, the world’s economic engine, had been
in recession since December of 2007 along with the fact
that U.S. manufacturing had hit a 26-year low was enough
The world’s economies will recover as equity and credit
markets strengthen. The price of commodities including
diamond will rise from their recent lows as market
conditions improve and demand increases. The Company
is well positioned to meet the challenges in the upcoming
year and for the years’ thereafter.
reason to add velocity to the already declining equity
We are looking forward to an exciting year ahead as
markets throughout the world. The credit crunch that
we make progress in the exploration for an economic
began in 2007 became an economic disaster in 2008. The
kimberlite and the discovery of an economic deposit
economy in 2008 will be referred to as a global financial
of base and precious metal. Please follow our progress
“meltdown”. All segments of the mining industry were
carefully and remain informed by regular visits to our
affected from international mining conglomerates to
website, www.TsodiloResources.com.
junior mining companies.
Commodity prices have
declined, mines have closed and many exploration
On behalf of the board,
companies have effectively ceased to exist.
On behalf of the board,
I am pleased to announce that as a result of our prior
year’s decision to purchase our own drill rig and
geophysical survey equipment, we were able to conduct
our exploration program without interruption throughout
the year. The chemical analysis of kimberlite indicator
minerals was completed on our most prospective
kimberlites and those results are currently being reviewed
and interpreted. We have made tremendous strides in our
base metals projects and drilling in 2008 has intersected
massive sulfides containing confirmed copper – nickel –
cobalt mineralization throughout our licenses blocks.
During the past year, the Company funded exploration
activity by raising funds in the capital markets through the
successful issuance of stock by way of private placements.
James M. Bruchs
President and Chief Executive Officer
March 27, 2009
Contents
President’s Message to Shareholders
Management’s Discussion and Analysis
of Financial Results
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2
Financial Reporting Responsibility of Management 13
This process will continue in the coming year. Our current
Auditors’ Report to the Shareholders
share base consists of 16,151,794 issued and outstanding
Consolidated Financial Statements / Notes
(19,733,893 on a fully diluted basis) common shares.
Corporate Information
14
15
IBC
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tsodilo resources limited
Management’s Discussion and Analysis
This management’s discussion and analysis (“MD&A”)
an interest in all future dividends that may be paid by
should be read in conjunction with the Consolidated
either Northbank Diamonds Limited, Hoanib Diamonds
Annual Financial Statements for the year ended December
(Proprietary) Limited or Trans Hex (Zimbabwe) Limited.
31, 2008 and comments on the factors that affected the
In addition, the Company was released from the long-
Company’s performance during the periods covered by
term loans due to Trans Hex Group by the subsidiaries
the Consolidated Annual Financial Statements as well as
being sold, of $3,341,690, and Trans Hex Group agreed
the Company’s financial condition and future prospects.
to return the 10,688,137 common shares in the capital
The Company’s functional and reporting currency is
of the Company, representing 73.22% of the issued
United States dollars and all amounts stated are in United
and outstanding shares of the Company at that time,
States dollar unless otherwise noted. This management’s
to treasury for cancellation. The special meeting of
discussion and analysis has been prepared as at March 27,
shareholders also approved the discontinuance of the
2009.
OVERVIEW
Tsodilo Resources Limited (“Tsodilo” or the “Company”)
was organized under the laws of the Province of Ontario
in 1996 and continued under the laws of the Yukon in
2002. The shares of the Company are listed and posted for
trading on the TSX Venture Exchange under the symbol:
TSD. Tsodilo is an international diamond exploration
company with the majority
interest
in a kimberlite
Company from the Province of Ontario and its continuance
under the Business Corporations Act (Yukon), the change
of name of the Company from Trans Hex International
Ltd. to Tsodilo Resources Limited, the election of new
directors and the repeal of the existing stock option plan
of the Company and adoption of a new stock option plan.
Following the restructuring of the Company, as approved
by shareholders in April 2002, Tsodilo has no long-term
debt.
exploration project in northwest Botswana. The Company
Outstanding Share Data
has not yet determined whether these properties
As of March 27, 2009, 16,151,794 common shares of the
contain reserves that can be economically mined. As an
Company were outstanding. Of the options to purchase
exploration stage company, the recoverability of amounts
common shares issued to eligible persons under the stock
shown for exploration expenditures is dependent upon
option plan of the Company, 1,935,000 options remain
the discovery of reserves that can be economically
outstanding of which 1,536,250 are exercisable at exercise
mined, the securing and maintenance of the interests
prices ranging from CAD $0.70 - $1.85. If all options were
in the properties, the ability of the Company to obtain
vested and exercised, 1,935,000 common shares of the
the necessary financing to complete the development,
Company would be issued.
and future production or proceeds from the disposition
thereof. The Company is also actively reviewing additional
diamond and base and precious metal opportunities
within southern Africa.
Corporate
At a special meeting of the holders of common shares of
the Company held on April 9, 2002 shareholders approved
a restructuring of the Company that incorporated the
sale of substantially all of the Company’s assets. The
assets were transferred in settlement on debt due of
$612,783 and owing to Trans Hex Group Limited (“Trans
Hex Group”), the principal shareholder and creditor of the
Company prior to restructuring. The Company retained
As of March 27, 2009, 2,374,800 warrants are outstanding.
The warrants were issued by way of the private placements
utilized by the Company for financing purposes. Each
warrant entitles the holder thereof to purchase one
common share of the Company at purchase prices
ranging from Canadian $0.70 - $0.80 for a period of two
years from the date of issuance (5/18/2009 – 2/23/2011).
If all warrants were converted, 2,374,800 common shares
of the Company would be issued.
Principal Shareholders of the Company
The largest shareholder of the Company is its President
and Chief Executive Officer, James M. Bruchs, who
currently owns, controls or directs 2,695,983 or 16.69%
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of the issued and outstanding common shares as of
high. Rivers rising off this high ground flowed westward
March 27, 2009. The SSRedmond Trust, currently owns,
into a major inland sea located in the north of present-day
controls or directs 2,505,931 or 15.51% of the issued and
Namibia. The Company’s diamond targets cover former
outstanding shares as of March 27, 2009; the Firebird
headwaters of this ancient river system and lie within the
Global Master Fund, Ltd. controls 1,875,630 or 11.61%
southern margin of the Congo craton.
of the issued and outstanding shares as of March 27,
2009; and, David J. Cushing, a director of the Company,
Base and Precious Metals Project
currently owns, controls or directs 1,774,994 or 10.98% of
In 2005, the Company initiated an internal investigation
the issued and outstanding shares of the Company.
Subsidiaries
The Company has a 94% operating interest in its Botswana
subsidiary, Newdico (Proprietary) Limited (“Newdico”),
which holds prospecting
licenses and applications
covering approximately 9,400 square kilometers
in
northwest Botswana on which there is encouragement
for the existence of undiscovered kimberlites in at least
three separate areas of the property. The Company’s
minority partner (6%) in this project, Trans Hex Group, is
an established South African diamond mining company.
with respect to the location of the sulphides-rich Matchless
Amphibolite Belt (“MAB”) comprising mineralized meta-
ophiolites that stretches from Namibia into Botswana and
most likely beyond. Copper (Cu), cobalt (Cu) and nickel
(Ni) mineralization along this Matchless Belt has been
known for more than a century. Our work has indicated
that the MAB tranverses our license blocks in northwest
Botswana linking the Damaran Belt to the Lufilian Arc.
The Lufilian Arc, better known as the Zambian copper belt
(>25 million tons of copper produced in Zambia), and its
extension into Katanga (Democratic Republic of Congo),
is a major source of mineral wealth that has captured the
The Company has a 100% interest in its wholly owned
minds of exploration geologists and mining magnates
Botswana subsidiary, Gcwihaba Resources (Proprietary)
ever since the discovery of this huge metallogenic
Limited (“Gcwihaba”), which has diamond prospecting
province revealed its copper, cobalt and uranium riches,
licenses covering approximately 4,300 square kilometers
more than 80 years ago. Drilling in 2008 located a large
and base and precious metal licenses covering 11,000
mineralized zone containing Cu, Ni and Co similar to the
square kilometers.
Exploration Activities
Diamond Projects
The Company’s Botswana licenses are proximal to two
major unexplained surface concentrations of diamonds
and G10 garnets across the border in Namibia, one near
the village of Tsumkwe and another in the area known
as Omatako. The characteristics of these kimberlite
pathfinder mineral anomalies
indicate that they are
secondary concentrations derived
from
respective
primary high-grade kimberlite sources located elsewhere.
The geomorphological model envisages that the Tsumkwe
and Omatako pathfinder anomalies were formed by
ancient rivers transporting diamonds and garnets derived
from kimberlites located in the Company’s license blocks.
Prior to the deposition of the superficial Kalahari sand that
covers much of Ngamiland, this area formed a topographic
Zambian copper-cobalt fields and the mafic- ultramafic
rocks of the Matchless-Mwembshi Belt as well as the
marked similarities that characterize all major Proterozoic
polymetalic stratiform deposits
in Africa, Australia
and North America. The Company’s new discovery in
northwest Botswana has a rich potential for an extensive
new base metal field.
General
During the year, the Company formalized its stewardship
membership with AEON
(Africa Earth Observatory
Network) at the University of Cape Town, Cape Town,
South Africa. AEON under the direction of Dr. Maarten
de Wit is a center for Earth-systems science that provides
a research and educational environment for consilience
between earth and life sciences, engineering, resource
economics and the human sciences. AEON is developing
earth stewardship as a science and cultivates cutting-
edge globally competitive
research and analytical
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learning, using advanced tools and technologies to
◊ Drill testing of approximately ten magnetic target
promote an interdisciplinary view and exploration of our
anomalies to the east / northeast of the Nxau Nxau
Earth and society, particularly in Africa. The AEON science
kimberlite field will commence in the 2nd quarter.
advisory group comprises 18 members spread across
four continents, five South African universities and from
industry.
NEWDICO (Pty) Limited (“Newdico”)
Summary of work completed in 2008 and to date
◊ Electron microprobe analysis on over 4,000 kimberlite
indicator minerals (“KIM”) from kimberlites A41, C15,
A36, 1821C16, PD07, PD25, B1, B2, B3, B4, B5, B6, B7,
B8 and B9 as well as those from A15 was completed in
early 2009. The KIM’s chemical compositions are being
examined to establish their suitability for the purpose of
aiding the Company’s decision in determining which if
◊ Completion of a ground magnetic geophysical survey
covering approximately 300 square kilometers has
commenced and will be completed in the 2nd quarter.
◊ Our study of the linkages between magnetotellurics,
other geophysical variables and kimberlite occurrences
and it’s applicability to our license areas in northwest
Botswana will continue in 2009. Work to date shows that
there is a correlation of certain values for diamondiferous
kimberlites as shown by the Resistivity and Temperature
maps at a 200 kilometer depth in relation to high resistivity
value areas and low temperature. This will assist us in
prioritizing our drill target selection.
any kimberlites in the Nxau Nxau should be examined for
The
favorable chemistry and diamond preservation
macro-diamond.
potential of the kimberlites in our license blocks together
with the known secondary alluvial diamond discoveries
◊ A detailed petrography study is ongoing on core samples
down slope across the border in Namibia establish the
from these kimberlites for the purpose of determining
greater Nxau Nxau field as highly prospective with the
their diamond-carrying potential.
possibility of several economic kimberlites present within
our ground. To date, at least 18% of the kimberlites
◊ A complete study of the kimberlites in the Company’s
discovered and tested for diamond in the Nxau Nxau field
Nxau Nxau kimberlite field for the purposing of selecting
are known to be diamondiferous.
kimberlites for macro diamond analysis is expected to be
completed in the 2nd quarter.
◊ Eight exploration
licenses totaling 7,396 square
GCWIHABA Resources (Pty) Limited
(“Gcwihaba”)
kilometers were relinquished during the year while ten
Diamond Licenses
licenses totaling 9,400 square kilometers were retained.
◊ See, Combined Work Program below.
Planned Exploration Program for 2009
The program
is based on our strategy of using a
combination of indicator mineral sampling, magnetic
and gravity data to generate individual targets for drill
Summary of work completed in 2008 and to date
◊ Core samples from priority targets have been submitted
for petrography review.
◊ Four exploration
licenses
totaling 3,875 square
kilometers were relinquished during the year and five
exploration licenses comprising 3,325 square kilometers
were granted.
evaluation and our regional strategy of evaluating
◊ See, Combined Work Program below.
possible transport corridors giving rise to the alluvial
secondary kimberlite
indicator minerals
(“KIM”) and
diamond deposits at Tsumkwe and Omatako. Our program
for 2009 will include the following:
Planned Exploration Program for 2009
◊ Drill testing of priority 1 and 2 target anomalies will
continue during the year.
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◊ A ground magnetic geophysical survey covering
LIQUIDITY AND CAPITAL RESOURCES
approximately 2,500 square kilometers has commenced
As at December 31, 2008, the Company had negative net
and will be completed in the 3rd quarter.
working capital of ($471,355) (2007: $207,155), which
Base and Precious Metals Licenses
Summary of work completed in 2008 and to date
◊ Two exploration licenses totaling 1,842 square kilometers
were relinquished during the year while twelve licenses
comprising 9,000 square kilometers were granted.
included cash and equivalents $61,827 (2007: $53,197).
These funds are managed in-house in accordance with
specific investment criteria approved by the board of
directors, the primary objective being the preservation
of capital to assure funding for exploration activities. The
Company completed a private placement for an additional
$405,000 in February 2009, see discussion in Financing
◊ Twenty exploratory holes were drilled in license blocks
Activities below. The Company does not hedge its activities
PL049/2008 and 050/2008.
Fifteen holes
intersect
or otherwise use derivatives. At year end, the Company
disseminate and massive mineralized sulfides.
did not have any material contractual obligations. The
◊ An examination of geochemical and geophysical
variations in the Ngamiland area and the application
of these observations to constrain areas of possible
economic interest on a regional scale continued. Amongst
Company is required to spend a minimum on prospecting
over the period of its licenses. On licenses current as of
December 31, 2008, the expenditure requirements if held
to their full term and exclusive of license fees are:
the data types compared are: aeromagnetics, geology,
Newdico
1,500,000 BWP
$193,335
soil geochemistry degree of exposure and detailed
Gcwihaba - Diamond
2,060,000 BWP
$265,513
geophysics data interpretations
◊ See, Combined Work Program below.
Planned Exploration Program for 2009
◊ Contined drilling of base metals targets to define the
mineralized structures discovered in 2008.
Gcwihaba - Base and
Precious Metals
4,400,000 BWP
$567,116
Financial Instruments
The carrying amounts reflected
in the consolidated
balance sheets
for cash and equivalents, accounts
receivable and accounts payable and accrued liabilities
approximate their fair values due to the short maturities
◊ Develop an operating program to
implement the
of these
instruments. The company does not hold
requirements of NI 43-101 for stating mineral reserves
financial derivatives. Due to the nature of the Company’s
and mineral resources on the Gcwihaba base and precious
operations, there is no significant credit or interest rate
metal license blocks.
risk.
Combined Newdico and Gcwihaba Work Program
Operating Activities
Cash outflow used in operating activities decreased from
Summary of work completed in 2008 and to date
$254,392 in fiscal December 31, 2007 to $164,324 for the
◊ A total of 63 kilometers of roads were cleared in Newdico
year ended December 31, 2008. The decrease was due to
and Gcwihaba license blocks and made accessible for the
a decrease in stock based compensation; the allocation
ground geophysical survey crew and drill equipment.
of salaries to the Company’s Botswana subsidiaries; and,
◊ A total of 4,378 kilometers of geophysical ground
management’s decision to
lower expenses pending
magnetic surveys were completed
in Newdico and
completion of research and analysis with respect to the
Gcwihaba license blocks.
prioritization of drill targets.
◊ 4,000 meters of diamond core drilling were completed
over twenty-three Newdico and Gcwihaba priority targets.
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ANNUAL INFORMATION
(in US dollars)
Total Revenues
Loss before Non-controlling Interest
Basic and diluted loss per share
Non-controlling Interest
Net Loss for the Year
Basic and diluted loss per share
Total Assets
Total long term liabilities
Cash dividends declared
Fiscal Year
Dec. 31
2008
Fiscal Year
Dec. 31
2007
--
(363,486)
($0.02)
--
(363,486)
($0.02)
4,725,290
214,854
--
--
(504,075)
($0.04)
--
(504,075)
($0.04)
4,050,815
228,395
--
QUARTERLY INFORMATION
(in US Dollars)
Fiscal Year 2007 (ended December 31, 2007)
Total Revenues
Loss for the period
Basic and diluted loss per share
Total Assets
Total long term liabilities
Fiscal Year 2008 (ended December 31, 2008)
Total Revenues
Loss for the period
Basic and diluted loss per share
Total Assets
Total long term liabilities
Quarter 1
Quarter 2
Quarter 3
Quarter 4*
--
(97,193)
($0.01)
3,491,244
225,763
--
(163,734)
($0.01)
4,246,648
228,395
--
(239,086)
($0.02)
3,779,683
225,236
--
(234,045)
($0.02)
4,220,483
228,395
--
(42,114)
($0.00)
3,904,928
229,607
--
(111,688)
($0.01)
4,337,120
228,395
--
(125,682)
($0.01)
4,050,815
228,395
--
145,981
$0.02
4,725,290
214,854
See accompanying notes to the consolidate fi nancial statements
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Investing Activities
Cash flow applied in investing activities decreased to
$682,200 for the year ended December 31, 2008 (2007:
$748,789).
Private Placement
Date
No. of
Units
Price
per Unit
Proceeds
March 11, 2008
457,901
$0.71
$325,000
November 14, 2008
463,492
$0.59
$275,000
Total
expenditures of
$820,118 on
exploration
Additional proceeds in the amount of $85,000 were
properties for the period ended December 31, 2008
received from the advance subscription on the issuance
were attributable to the Newdico and Gcwihaba projects
of common shares for the offering February 26, 2009.
in northwest Botswana. Included in this amount is the
proportionate contributory share, ranging from 7.14% to
6.36% attributed to the Trans Hex Group for the Newdico
project. There were no material disposals of capital assets
or investments during the year.
Subsequent to the fiscal period end, the Company issued,
through a non-brokered private placement 728,061 units
at a price of $0.71 (CAD$0.70) per unit for gross proceeds
of $405,000. Each unit consists of one common share
of the Company and one warrant of the Company, each
In December 2008, the board of directors of Newdico
warrant entitling the holder to purchase one common
approved an exploration program and budget for the
share of the Company at a price of C$0.70 for a period
period January 1, to December 31, 2009 that calls for
of two years. The common shares, warrants and warrant
expenditures totaling approximately Pula 8.65 million
shares are subject to a hold period of 12 months, as
(approximately $1.15 million as of December 31, 2008).
agreed to by the parties, expiring on February 26, 2010.
The 2009 budget envisions a mini-bulk sampling program
for macro-diamond analysis on one or more kimberlites.
To date, no kimberlite has been selected for such testing.
Trans Hex Group is presently responsible for funding 6% of
the expenses of this company. The approved exploration
program includes provision for additional drilling, soil
sampling, ground geophysical surveys, processing and
analysis.
Financing Activities
Following the restructuring of Tsodilo in April 2002 and
the cancellation of the shares formerly held by Trans
Hex, the source of financing for the Company’s activities
changed from debt (related party) finance to equity,
through the issue of units by way of non-brokered private
placements. Each unit has consisted of one common share
Tsodilo expects to raise the amounts required to fund its
94% share of the Newdico project, the Gcwihaba projects
and corporate general and administration expenses, by
way of non-brokered private placements.
RESULTS OF OPERATIONS
On a consolidated basis, Tsodilo recorded a net loss of
$363,486 in the fiscal year ended December 31, 2008
($0.02 cents per common share) compared to a net loss
of $504,075 in the fiscal period ended December 31,
2007 ($0.04 cents per common share). The Company
experienced decreases in travel, investor relations and
office and admin expenses reflecting general corporate
activity. The decrease in stock option expense reflects the
timing of option grants.
of the Company and one or one-half a warrant with each
Exploration expenditures on all projects amounted to
full such warrant entitling the holder to purchase one
$820,118 during the year ended December 31, 2008
common share of the Company for a purchase price equal
compared to $914,757 for the year ended December 31,
to the unit price for a period of two years from the date
2007. Exploration expenditures incurred on the Newdico
of issuance.
During the year ended December 31, 2008 the Company
received gross proceeds in the amount of $600,000 from
the issuance of units consisting of one common share and
one warrant related to private placements.
project for the year ended December 31, 2008 was $685,235
compared to $908,321 for the year ended December
31, 2007. The principal components of the Newdico
exploration program were: (a) additional soil sampling and
the completion of the processing and analysis of the soil
samples; (b) commissioning of further ground magnetic
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surveys of selected aeromagnetic anomalies; (c) analyzing
Capital Requirements
detailed propri etary aeromagnetic maps covering the
In the absence of cash flow from operations, Tsodilo relies
target areas; and (d) commencement of a diamond
on capital markets to fund its operations. The ongoing
core drilling program on selected targets. Exploration
exploration and eventual successful development of
expenditures incurred on the Gcwihaba project for the
a diamond mine would require significant additional
year ended December 31, 2008 were $134,883 compared
financing. There can be no assurance that adequate
to $6,436 for the year ended December 31, 2007.
funding will be available, or available under terms
PERSONNEL
At December 31, 2008, the Company and its subsidiaries
employed twenty-three (23) individuals compared to
twenty (20) at December 31, 2007, including senior
officers,
administrative
and operations personnel
including those on a short-term service basis.
FOURTH QUARTER – 2008
favorable to the Company, for these purposes when
ultimately required. The exploration and development of
mineral deposits involve significant financial risks over an
extended period of time. Even a combination of careful
evaluation, experience and knowledge may not eliminate
these risks. While discovery of a diamond or base and
precious metal deposit may result in substantial rewards,
few exploration properties ultimately become producing
The fourth quarter was a normal operating period for a
mines.
quarter and year end. Having acquired drilling equipment
and geophysical equipment in 2006 and an additional
magnetometer during the current year, the Company was
able to continue its drilling program and its geophysical
surveys to the end of the year without interruption.
Operating expenses were at normal levels for the last
quarter of the year.
Off-Balance Sheet Arrangements
The Company has not entered into any off-balance sheet
financing arrangements., such as guarantee contracts,
contingent interest in assets transferred to an entity,
derivative instrument obligations or any obligations that
trigger liquidity market or credit risk to the Company.
RISKS AND UNCERTAINTIES
Exploration Risks
Tsodilo’s primary objective
is the discovery of an
The Company’s operations are subject to all the hazards and
economic kimberlite diamond deposit capable of
risks normally incident to the exploration, development
rapid advancement to feasibility stage and ultimate
and mining of diamond deposits, any of which could result
development as a producing property. The discovery of a
in damage to life or property, environmental damage and
kimberlite is only the first step in the exploration process.
possible legal liability for any or all damage. Whether a
Subsequent evaluation begins with caustic
fusion
diamond deposit will ultimately be commercially viable
diamond analysis of the kimberlite and, if results warrant,
depends on a number of factors, including the particular
continues through progressively larger mini-bulk and
attributes of the deposit such as the deposit’s size;
bulk samples in order to make an increasingly accurate
the quality and quantity of the diamonds; its proximity
determination of the content and quality of the diamonds.
to existing
infrastructure;
financing costs and the
Early stages of kimberlite evaluation provide an initial
prevailing prices for diamonds. Also of key importance
qualitative assessment rather than an accurate indication
are government regulations, including those relating to
of either the grade of the ore body or the value per carat
prices, taxes, royalties, land tenure, land use, the importing
of the diamonds. Collection of larger bulk samples and
and exporting of diamonds and production plant and
formal appraisal of a commercial-size parcel of diamonds
equipment, and environmental protection. The effects
are necessary to make an accurate determination of these
of these factors cannot be accurately predicted, but any
parameters. At any stage in the process, the results may
combination of them may impede the development of a
indicate that the deposit lacks the required economic
deposit or render it uneconomic.
value.
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CRITICAL RISK FACTORS
Currency Risks
The Company’s financing has generally been received in
United States Dollars (USD) while significant portions of
its operating expenses has been and will be incurred in
Botswana Pula (BWP). The current USD / BWP currency
exchange rate has never been more favorable to the
Company. While currency fluctuations will certainly occur
throughout 2009 as the world economic and credit crisis
seeks stabilization, it is anticipated that the USD / BWP
exchange rate will remain advantageous to the Company
on a historical basis in 2009.
assess an entity’s ability to continue as a going concern
and to disclose material uncertainties related to events or
conditions that may cast doubt upon the entity’s ability to
continue as a going concern.
(ii) Capital disclosures- Section 1535
This new pronouncement establishes standards
for
disclosing information about an entity’s capital and how
it is managed. Section 1535 also requires the disclosure
of any externally-imposed capital requirements, whether
the entity has complied with them, and if not, the
consequences.
(iii) Financial Instruments – Sections 3862 & 3863 –
Key Personnel
Disclosures and Presentation
The Company is dependent upon on a relatively small
These new sections 3862 (on disclosures) and 3863
number of key employees, the loss of any of whom could
(on presentation) replace Section 3861, revising and
have an adverse effect on the Company. The Company
enhancing
its disclosure requirements, and carrying
currently does not have key personal insurance on these
forward unchanged
its presentation
requirements.
individuals.
ACCOUNTING STANDARDS
Tsodilo follows Canadian generally accepted accounting
principles. The Company has adopted the policy of
deferring property specific acquisition and exploration
costs. Deferred costs relating to properties that are
Section 3862 complements the principles recognizing
measuring and presenting financial assets and financial
liabilities in Financial Instruments. Section 3863 deals
with the classification of financial instruments, from the
perspective of the issuer, between liabilities and equity,
the classification of related interest, dividends, losses and
gains, and the circumstances in which financial assets and
relinquished, or where continued exploration is deemed
financial liabilities are offset.
inappropriate, are written off in the year such assessment is
made (no such write-offs were incurred in 2007 and 2008).
If Tsodilo adopted a policy of expensing all exploration
costs, the Company’s asset base, shareholders’ equity, and
loss from operations would be materially different.
The Company evaluates its license properties on a project
basis as opposed to treating each individual license block
as a separate project.
ADOPTION OF NEW ACCOUNTING STANDARDS
New Accounting Pronouncements
Effective January 1, 2008 the Company is required to adopt
the following new Canadian accounting pronouncements:
The adoption of Sections 1400, 1535, 3862 and 3863 did
not have a material impact on the consolidated financial
statements of the Company.
Future Changes in Accounting Policies
International Financial Reporting Standards
(“IFRS”)
On February 13, 2008, the Canadian Accounting Standards
Board (“AcSB”) confirmed the use of International Financial
Reporting Standards (“IFRS”) to commence in 2011 for
publicly accountable profit-oriented enterprises.
IFRS will replace Canada’s Generally Accepted Accounting
Principles (“GAAP”) and the official changeover date is for
(i) Assessing going concern – Section 1400
interim and annual financial statements relating to fiscal
The Accounting Standards Board (AcSB) amended the
years beginning on or after January 1, 2011.
Section 1400, to include requirements for management to
9
tsodilo resources limited
The Company’s Botswana subsidiaries already report
early adopted at the same time as Section 1582 “Business
using IFRS and Tsodilo Resources Limited will adopt IFRS
Combinations”.
according to requirements outlined by the AcSB, and is
in the process of preparing for the adoption of IFRS on
RELATED PARTY TRANSACTIONS
January 1, 2011.
Impact of Adoption of International Financial
Reporting Standards (“IFRS”)
During the year, the Company borrowed funds from a
person who is an officer and director of the Company. The
loans are interest free, payable upon demand and have no
other terms of repayment. The amount of borrowing and
IFRS are premised on a conceptual framework similar to
repayment for fiscal years 2008 and 2007 are as follows:
Canadian GAAP, however, significant differences exist
in certain matters of recognition, measurement and
disclosure.
The Company’s
IFRS conversion project consists of
four phases: raise awareness; assessment; design; and
implementation. The Company is currently in the process
of
identifying
the significant differences between
Canadian GAAP and IFRS as it relates to Tsodilo Resources
Limited.
Total Amount
Borrowed
Total Amount
Repaid
2008
2007
$55,000
$145,000
$75,000
$20,000
Amount
Outstanding at
year end
$105,000
$125,000
During the years ended December 31, 2006, 2007 and
2008, the company incurred accrued annual salary (2006:
$8,650, 2007: $130,000, 2008: $156,000) and leave benefits
(2008: $19,024) payable to an officer and director of the
As the Company continues to evaluate the impact of
company amounting to $313,674. In 2007, accrued leave
adoption on its processes and accounting policies it will
benefits in the amount of $87,192 was offset by an officer
provide updated disclosure where appropriate.
Business combinations and related sections
In January 2009, the CICA issued Section 1582 “Business
Combinations” to replace Section 1581. Prospective
application of the standard is effective January 1, 2011,
with early adoption permitted. This new standard
effectively harmonizes
the business combinations
standard under Canadian GAAP with
International
Financial Reporting Standards (“IFRS”). The new standard
revises guidance on the determination of the carrying
amount of the assets acquired and liabilities assumed,
goodwill and accounting for non-controlling interests at
the time of a business combination.
The CICA concurrently issued Section 1601 “Consolidated
Financial Statements” and Section 1602 “Non-Controlling
Interests,” which replace Section 1600 “Consolidated
Financial Statements.” Section 1601 provides revised
guidance on the preparation of consolidated financial
statements and Section 1602 addresses accounting
for non-controlling interests in consolidated financial
statements subsequent to a business combination. These
standards are effective January 1, 2011, unless they are
and director for the exercise of options (exercise cost
$20,203) on December 7, 2007 and participation (97,102
units for a value of $66,989) in the Company’s December
2007 private placement.
Tsodilo and its wholly owned subsidiary, Tsodilo Resources
Bermuda (Ltd) (“TSDB”) entered into an agreement with
Trans Hex Group and its wholly owned subsidiary Trans
Hex Diamond (“THD”) with respect to their respective
interests in Newdico (Pty) Ltd. (“Newdico”). At the time
of agreement, Trans Hex Group owned 73.22% of Tsodilo.
The agreement between the parties established that all
expenditures undertaken by Newdico up to and including
March 31, 2002 shall be deemed to have been incurred
by Newdico and funded by TSDB and THD by way of
shareholders loan account by Tsodilo as to 75% thereof;
and Trans Hex as to 25% thereof.
Of the outstanding loan amounting to $1,611,058 as at
31 March 2002, $1,149,078 shall constitute a secondary
loan, deemed to have been advanced to the company by
TSDB as to 75% thereof and THD as to 25% thereof and such
secondary loans shall only be repayable after the primary
loans have been repaid to TSDB and THD in full. These
10
tsodilo resources limited
secondary loans shall be repayable before any additional
ADDITIONAL INFORMATION
secondary loans, which shall be repaid in the proportions
Additional
information relating to Tsodilo Resources
in which they have been advanced. Thereafter, as to the
Limited is available at www.TsodiloResources.com, or
secondary loans which existed as of March 31, 2002, in
through SEDAR at www.sedar.com
proportion after the additional secondary loans have
been repaid, $461,980.67 shall be deemed to have been
FORWARD-LOOKING STATEMENTS
advanced to the company by TSDB as to 75% thereof and
The Annual Report,
including this MD&A, contains
THD as to 25% thereof (“the primary loan”). The primary
certain forward-looking statements related to, among
loans shall be repayable in full before any parts of the
other things, expected future events and the financial
secondary loans are repayable.
The secondary
loans shall not be
included
in the
necessary calculations for purposes of the share dilution
provisions. All dilution calculations shall be based only on
the value of the primary loans. All funding of the company
by shareholders for purposes of the Ngami project,
shall constitute additional primary loans, or additional
secondary loans in the circumstances and to the extent
set out in the parties agreement.
As of December 31, 2008, TSDB holds a 94% (2007: 93%)
interest in Newdico while THD holds 6% (2007: 7%). The
change in the parties’ respective interest in the project
is attributed to the dilution of THD’s interest as a result
of not funding their proportionate share of expenditures
from 2002 to date. The following numbers are reflected in
and operating results of the Company. Forward-looking
statements are subject to inherent risks and uncertainties
including, but not limited to, market and general economic
conditions, changes in regulatory environments affecting
the Company’s business and the availability and terms of
financing. Other risks are outlined in the Uncertainties
and Risk Factors section of this MD&A. Consequently,
actual results and events may differ materially from those
included in, contemplated or implied by such forward
looking statements for a variety of reasons. Readers are
therefore cautioned not to place undue reliance on any
forward-looking statement. The Company disclaims
any intention and assumes no obligation to update any
forward-looking statement even
if such
information
becomes available as a result of future events or for any
other reason.
our records.
Long-Term:
Loan from Tsodilo Resources
Bermuda Limited
Total Loan Outstanding
Eliminated in Consolidation
Primary
$ 3,982,821
Secondary
$ 705,244
$ 4,668,065
Gary A. Bojes
Loan from Trans Hex Diamonds
Ltd (Minority Interest)
Primary
$ 214,854
Chief Financial Officer
March 27, 2009
OUTLOOK
Diamond and base and precious metal exploration
remains a high-risk undertaking requiring patience and
persistence. Despite difficult capital markets in the junior
resource sector, the Company remains committed to
international commodity exploration through carefully
managed programs.
11
tsodilo resources limited
THIS PAGE INTENTIONALLY LEFT BLANK
12
tsodilo resources limited
Financial Reporting Responsibility of Management
The annual report and consolidated financial statements
its responsibilities for financial reporting and internal
have been prepared by management. The consolidated
control. The Audit Committee is composed of three
financial statements have been prepared in accordance
directors, all of whom qualify as unrelated directors
with Canadian generally accepted accounting principles
and are independent of management and free from any
and
include amounts that are based on
informed
interest or business relationship which could, or could be
judgments and best estimates. The financial information
perceived to materially interfere with their ability to act in
presented
in this annual report
is consistent with
the best interests of the Company. This committee meets
the consolidated
financial statements. Management
periodically with management and the external auditors
acknowledges responsibility for the fairness, integrity
to review accounting, auditing,
internal control and
and objectivity of all information contained in the annual
financial reporting matters. The Audit Committee reviews
report including the consolidated financial statements.
the annual financial statements before they are presented
Management is also responsible for the maintenance of
to the Board of Directors for approval and considers the
financial and operating systems, which include effective
independence of the auditors.
controls to provide reasonable assurance that assets are
properly protected and that relevant and reliable financial
information is produced. Our independent auditors have
the responsibility of auditing the consolidated financial
statements and expressing an opinion on them.
The Board of Directors, through its Audit Committee,
is responsible for ensuring that management fulfills
The financial statements for the period ended December
31, 2008, have been audited by Ernst & Young, the external
auditors, in accordance with Canadian generally accepted
auditing standards on behalf of the shareholders. Their
report follows hereafter.
James M. Bruchs
President and Chief Executive Offi cer
March 27, 2009
Gary A. Bojes
Chief Financial Offi cer
March 27, 2009
13
tsodilo resources limited
Auditors’ Report
To the Shareholders,
Tsodilo Resources Limited
We have audited the consolidated balance sheet of
audit also includes assessing the accounting principles
Tsodilo Resources Limited as at December 31, 2008
used and significant estimates made by management,
and the consolidated statements of operations and
as well as evaluating the overall financial statement
comprehensive
loss, deficit, and cash flows for the
presentation.
year then ended. These financial statements are the
responsibility of
the Company’s management. Our
In our opinion, these consolidated financial statements
responsibility is to express an opinion on these financial
present fairly,
in all material respects, the financial
statements based on our audit.
position of the Company as at December 31, 2008 and
the results of its operations and its cash flows for the
We conducted our audit in accordance with Canadian
year then ended in accordance with Canadian generally
generally accepted auditing standards. Those standards
accepted accounting principles.
require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements
The consolidated financial statements at December 31,
are free of material misstatement. An audit includes
2007 and for the year then ended were audited by other
examining, on a test basis, evidence supporting the
auditors who expressed an opinion without reservation
amounts and disclosures in the financial statements. An
on those statements in their report dated March 21, 2008.
Vancouver, Canada
March 27, 2009
Chartered Accountants
14
tsodilo resources limited
Tsodilo Resources Limited
Consolidated Balance Sheets
As at December 31, 2008 and 2007
(in United States dollars)
ASSETS
Current
Cash
Accounts receivable and prepaid expenses
Exploration Properties (note 3)
Property, Plant and Equipment (note 4)
LIABILITIES
Current
Accounts payable and accrued liabilities
Notes Payable (note 8)
Capital Subscriptions (note 13)
Non-Controlling Interest (note 3 and 8)
SHAREHOLDERS' EQUITY
Share Capital (note 5)
Warrants (note 5b)
Contributed Surplus (note 5c)
Accumulated Other Comprehensive Income
Defi cit
2008
2007
61,827
19,491
81,318
4,158,993
484,979
4,725,290
362,673
105,000
85,000
552,673
214,854
27,862,864
417,815
7,798,255
(837,425)
53,197
33,294
86,491
3,338,875
625,449
4,050,815
168,646
125,000
--
293,646
228,395
27,423,585
1,194,742
6,668,132
(837,425)
(31,283,746)
(30,920,260)
3,957,763
4,725,290
3,528,774
4,050,815
Going Concern (note 1)
Subsequent events (note 13)
Commitments (note 11)
See accompanying notes to the consolidate fi nancial statements
APPROVED ON BEHALF OF THE BOARD OF DIRECTORS
APPROVED ON BEHALF OF THE BOARD OF DIRECTORS
Patrick C. McGinley
Chairman of the Audit Committee
James M. Bruchs
Director
15
tsodilo resources limited
Tsodilo Resources Limited
Consolidated Statements of Operations and Comprehensive Loss
For the years ended December 31, 2008 and 2007
2008
2007
25,026
784
13,924
42,519
23,390
80,344
2,552
(21,663)
196,610
(363,486)
-
(363,486)
$(0.02)
123,624
8,233
52,159
44,397
39,780
9,067
2,926
(22,868)
246,757
(504,075)
-
(504,075)
$(0.04)
(in United States dollars)
Expenses
Corporate remuneration
Corporate travel and subsistence
Investor relations
Legal and audit
Filings & Regulatory Fees
Offi ce and administration
Amortization
Foreign exchange gain
Stock-based compensation (note 5)
Loss before non-controlling interest
Non-controlling interest
Loss and comprehensive loss for the year
Basic and diluted loss per share - cents (note 7)
See accompanying notes to the consolidate fi nancial statements
Tsodilo Resources Limited
Consolidated Statements of Defi cit
For the years ended December 31, 2008 and 2007
(in United States dollars)
Defi cit – Beginning of period
(30,920,260)
(30,416,185)
2008
2007
Loss for the year
Defi cit - End of year
(363,486)
(504,075)
(31,283,746)
(30,920,260)
The accompanying notes are an integral part of these consolidated fi nancial statements.
16
tsodilo resources limited
Tsodilo Resources Limited
Consolidated Statements of Cash Flows
For the years ended December 31, 2008 and 2007
(in United States dollars)
Cash provided by (used in):
Operating Activities
Loss for the year
Adjustments for non-cash items:
Amortization
Stock-based compensation (note 5)
Net change in non-cash working capital balances (note 12)
Investing Activities
Exploration properties
Additions to property, plant and equipment
Financing Activities
Shareholder Loan issued
Shareholder Loan redeemed
Capital Subscriptions
Issue of common shares
Change in non-controlling interest
Change in cash - For the year
Cash - Beginning of year
Cash - End of year
2008
2007
(363,486)
2,552
196,610
(164,324)
207,829
43,505
(659,714)
(22,486)
(682,200)
55,000
(75,000)
85,000
595,866
(13,541)
647,325
8,630
53,197
61,827
(504,075)
2,926
246,757
(254,392)
87,046
(167,346)
(735,774)
(13,015)
(748,789)
125,000
--
--
660,251
(17,096)
768,155
(147,980)
201,177
53,197
The accompanying notes are an integral part of these consolidated fi nancial statements.
17
tsodilo resources limited
Tsodilo Resources Limited
Notes to the Consolidated Financial Statements
For the years ended December 31, 2008 and 2007
1. NATURE OF OPERATIONS AND GOING CONCERN
Tsodilo Resources Limited (“Tsodilo” or “The Company”) is an exploration stage company which is engaged principally
in the acquisition, exploration and development of mineral properties in the Republic of Botswana. The recovery of
the Company’s investment in mineral properties and the attainment of profitable operations are dependent upon the
discovery, development and sale of ore reserves, and the renewal of licenses, the ultimate outcome of which cannot
presently be determined as they are contingent on future events. The Company along with its subsidiaries operates
internationally with projects in continental Africa. These financial statements have been prepared using Canadian
generally accepted accounting principles applicable to a going concern, which assumes continuity of operations,
realization of assets, and settlement of liabilities in the normal course of business.
As at December 31, 2008, the Company reported an accumulated deficit of $31,283,746 [2007: $30,920,260] and negative
net cash outflows from operations of $164,324 [2007: $254,392] for the year then ended. The cash position of the Company
is insufficient to finance continued exploration. As an exploration stage company, it is currently unable to self-finance
its operations. Management believes that it will be able to secure the necessary financing through a combination of
the issue of new equity or debt instruments, the entering into of joint venture arrangements or the exercise of warrants
and options for the purchase of common shares. However, there is no assurance that the Company will be successful in
these actions.
As at December 31, 2008, the Company had cash of $61,827 [2007: $53,197] and received $320,000 [2007: $325,000]
subsequent to year end.
These financial statements do not reflect the adjustments, which could be material, to the carrying value of assets and
liabilities, the reported revenues and expenses and balance sheet classifications that would be necessary were the going
concern assumption inappropriate.
The accompanying consolidated financial statements reflect, in the opinion of management, all adjustments (which
include reclassifications and normal recurring adjustments) necessary to present fairly the financial position at December
31, 2008 and its results of operations and its cash flows for the period then ended and for all such periods presented.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of consolidation and preparation of the consolidated financial statements
The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting
principles (“GAAP”) and include the accounts of the Company and its direct and indirect subsidiaries. All inter-company
transactions and balances have been eliminated.
Group Companies as at December 31
Tsodilo Resources Bermuda Limited
Gcwihaba Resources (Proprietary) Ltd (“Gcwihaba”) [Botswana]
2008
100%
100%
2007
100%
100%
Newdico (Proprietary) Limited (“Newdico”) [Botswana]
94% (note 3)
93% (note 3)
18
tsodilo resources limited
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Earnings per share
Basic Earnings-Per-Share (EPS) is computed as net income (loss) applicable to common stockholders divided by the
weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution
that could occur from common shares issued through stock options, warrants and other convertible securities when the
effect would be dilutive. The “treasury share method” is used when calculating diluted earnings per share. However,
diluted loss per share has not been presented as the potential exercise / conversion of options and warrants outstanding
would have the effect of reducing loss per share. Basic and diluted losses per share are therefore presented as the same
figure.
Use of estimates
The preparation of the consolidated financial statements in conformity with Canadian GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the consolidated financial statements. The most significant estimates are
related to the valuation of warrants and options, the recoverability of exploration expenditures, and property, plant and
equipment. There are no contingencies. Actual results could differ from those estimates.
Exploration properties
All costs relating to the acquisition, exploration and development of non-producing mining properties are capitalized
as incurred. The amounts capitalized represent costs to be charged to operations in the future and do not necessarily
reflect the present or future values of the particular properties.
If a property proceeds to development, these costs become part of preproduction and development costs of the mine
and will be amortized over the expected life of the mine. If a property is abandoned, sold or continued exploration is
not deemed appropriate in the foreseeable future or when other events and circumstances indicate that the carrying
amount may not be recovered, the related costs and expenditures are written down to the net recoverable amount at
the time the determination is made. Proceeds from the sale of exploration properties are credited to the costs of the
relevant property.
Exploration costs that do not relate to specific non-producing mining properties are expensed as incurred.
The Company evaluates its license properties on a project basis as opposed to treating each individual license block as
a separate project.
Mineral properties are reviewed for impairment and if deemed impaired, an impairment loss is measured and recorded
based on the net recoverable value of the asset.
Property, Plant and Equipment
Property, plant and equipment are amortized principally on a straight-line basis over their estimated useful lives of
three to five years to their estimated residual values. Property, plant and equipment awaiting installation on site are
not amortized until they are commissioned. Property, plant and equipment are reviewed for impairment and if deemed
impaired, an impairment loss is measured and recorded based on the net recoverable value of the asset.
19
tsodilo resources limited
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Foreign Currency Translation
The Company’s functional and reporting currency is the US dollar. The Company’s subsidiaries are accounted for as
integrated foreign operations. Transactions of the Company and its subsidiaries originating in foreign currencies are
translated at the rates in effect at the time of the transaction. Monetary items are denominated in foreign currencies
are translated to US dollar at exchange rates in effect at the balance sheet dates and non-monetary items are translated
at rates of exchange in effect when the assets were acquired or obligations incurred. Revenue and expense items are
translated at the average rate prevailing during the year except for depreciation, depletion, amortization and write-
downs, which are translated at the same exchange rates as the assets to which they relate. Foreign exchange gains and
losses are included in the statement of operations.
Income Taxes
The Company uses the asset and liability method of accounting for income taxes. Assets and liabilities are recognized for
the estimated future tax consequences attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. A valuation allowance is recorded against any future income
to an asset if it is more than likely than not that the asset will not be realized. Future income tax assets and liabilities are
measured using tax rates in effect for the period in which those temporary differences are expected to be recovered or
settled. The effect on future income tax assets and liabilities of a change in tax rates or laws is recognized as part of the
provision for income taxes in the period the changes are considered substantively enacted. The Company does not have
deferred tax assets, deferred tax liabilities or current tax provisions.
Stock-Based Compensation Plans
Tsodilo has a Stock Option Plan (refer to note 5). Under the Stock Option Plan, the Company may grant options to
directors, officers and employees for up to 2,715,471 shares of common stock. The exercise price is determined by the
Chairman of the Compensation Committee and the President and CEO in consultation with the board of directors, but is
not less than the market price of the Company’s stock on the date of the grant. An option’s maximum term is 5 years. The
Company uses the fair value method of accounting for stock options. Under the fair value method stock-based payments
are measured at the fair value of the equity investments and are amortized over the vesting period. Consideration paid
on exercise of stock options is credited to common share capital.
Asset Retirement Obligations
The Company recognizes the fair value of liabilities for asset retirement obligations in the period in which they occur
and/or in which a reasonable estimate of such costs can be made using the total undiscounted cash flows required to
settle estimated obligations, estimated expected timing of cash flow payments required to settle the obligations and
estimated credit-adjusted risk free discount rates and inflation rates. As at December 31, 2008, the Company did not
have any asset retirement obligations.
Financial Instruments
Effective January 1, 2007, the Company adopted a new standard, the Canadian Institute of Chartered Accountants’ (CICA)
Handbook Section 3855, “Financial Instruments – Recognition and Measurement”. Under the new standard, all financial
instruments are classified as one of the following: held-to-maturity, loans and receivables, held-for-trading or available-
for-sale. Financial assets and liabilities held-for-trading are measured at fair value with gains and losses recognized
20
tsodilo resources limited
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
in net income. Financial assets held-to-maturity, loans and receivables, and financial liabilities other than those held-
for-trading, are measured at amortized cost. Available-for-sale instruments are measured at fair value with unrealized
gains and losses recognized in other comprehensive income. The standard also permits designation of any financial
instrument as held-for-trading upon initial recognition.
Comprehensive Income, Section 1530
This standard requires the presentation of a statement of comprehensive income and its components. Comprehensive
income includes both net earnings and other comprehensive income. Other comprehensive income (“OCI”) includes
holding gains and losses on available for sale investments, gains and losses on certain derivative instruments and foreign
currency gains and losses relating to self-sustaining foreign operations, all of which are not included in the calculation of
net earnings until realized. As prescribed by these standards, prior periods have not been restated.
ADOPTION OF NEW ACCOUNTING STANDARDS
New Accounting Pronouncements
Effective January 1, 2008 the Company is required to adopt the following new Canadian accounting pronouncements:
(i) Assessing going concern – Section 1400
The Accounting Standards Board (AcSB) amended the Section 1400, to include requirements for management to assess
an entity’s ability to continue as a going concern and to disclose material uncertainties related to events or conditions
that may cast doubt upon the entity’s ability to continue as a going concern.
(ii) Capital disclosures- Section 1535
This new pronouncement establishes standards for disclosing information about an entity’s capital and how it is
managed. Section 1535 also requires the disclosure of any externally-imposed capital requirements, whether the entity
has complied with them, and if not, the consequences.
(iii) Financial Instruments – Sections 3862 & 3863 – Disclosures and Presentation
These new sections 3862 (on disclosures) and 3863 (on presentation) replace Section 3861, revising and enhancing its
disclosure requirements, and carrying forward unchanged its presentation requirements. Section 3862 complements
the principles recognizing measuring and presenting financial assets and financial liabilities in Financial Instruments.
Section 3863 deals with the classification of financial instruments, from the perspective of the issuer, between liabilities
and equity, the classification of related interest, dividends, losses and gains, and the circumstances in which financial
assets and financial liabilities are offset.
The adoption of Sections 1400, 1535, 3862 and 3863 did not have a material impact on the consolidated financial
statements of the Company.
21
tsodilo resources limited
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Future Changes in Accounting Policies
International Financial Reporting Standards (“IFRS”)
On February 13, 2008, the Canadian Accounting Standards Board (“AcSB”) confirmed the use of International Financial
Reporting Standards (“IFRS”) to commence in 2011 for publicly accountable profit-oriented enterprises.
IFRS will replace Canada’s Generally Accepted Accounting Principles (“GAAP”) and the official changeover date is for
interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011.
The Company’s Botswana subsidiaries already report using IFRS and Tsodilo Resources Limited will adopt IFRS according
to requirements outlined by the AcSB, and is in the process of preparing for the adoption of IFRS on January 1, 2011.
Impact of Adoption of International Financial Reporting Standards (“IFRS”)
IFRS are premised on a conceptual framework similar to Canadian GAAP, however, significant differences exist in certain
matters of recognition, measurement and disclosure.
The Company’s IFRS conversion project consists of four phases: raise awareness; assessment; design; and implementation.
The Company is currently in the process of identifying the significant differences between Canadian GAAP and IFRS as it
relates to Tsodilo Resources Limited.
As the Company continues to evaluate the impact of adoption on its processes and accounting policies it will provide
updated disclosure where appropriate.
Business combinations and related sections
In January 2009, the CICA issued Section 1582 “Business Combinations” to replace Section 1581. Prospective application
of the standard is effective January 1, 2011, with early adoption permitted. This new standard effectively harmonizes
the business combinations standard under Canadian GAAP with International Financial Reporting Standards (“IFRS”).
The new standard revises guidance on the determination of the carrying amount of the assets acquired and liabilities
assumed, goodwill and accounting for non-controlling interests at the time of a business combination.
The CICA concurrently issued Section 1601 “Consolidated Financial Statements” and Section 1602 “Non-Controlling
Interests,” which replace Section 1600 “Consolidated Financial Statements.” Section 1601 provides revised guidance
on the preparation of consolidated financial statements and Section 1602 addresses accounting for non-controlling
interests in consolidated financial statements subsequent to a business combination. These standards are effective
January 1, 2011 unless they are early adopted at the same time as Section 1582 “Business Combinations”.
22
tsodilo resources limited
3. EXPLORATION P ROPERTIES
Exploration properties are summarized as follows:
Newdico
Gcwihaba
Total
Botswana
Botswana
Balance at December 31, 2006
$ 2,193,446
$ 230,672
$ 2,424,118
Jan. to Dec 2007 expenditures
908,321
6,436
914,757
Balance at December 31, 2007
3,101,767
237,108
3,338,875
Jan. to Dec 2008 expenditures
685,235
134,883
820,118
Balance at December 31, 2008
$ 3,787,002
$ 371,991
$ 4,158,993
A summary of the significant agreements entered into by the Company is as follows:
Newdico (Proprietary) Limited (“Newdico”) - Botswana
Newdico holds prospecting licenses in the Ngamiland District of northwest Botswana. The Company acquired the
various licenses in 1999, 2001 and 2003. In 2005, the Company was reissued its prospecting licenses for an initial term
of three years expiring June 30, 2008, renewable for 2 two year periods upon application and have a final expiry of
2012. In June of 2008, Newdico relinquished approximately 7,400 square kilometers of the then outstanding 16,800
square kilometers under license. The licenses relinquished were evaluated and determine to be non-prospective for an
economic kimberlite discovery. The relinquishment of this portion of the overall licenses will not cause a reduction or
change in the continuing overall exploration program nor impact the chances of the overall success of the program. The
balance of the licenses totaling 9,400 square kilometers were renewed for 2 two year periods. The terms of the licenses
require Newdico to spend a minimum of Botswana Pula 1.5 million (approximately $193,335 as at 12/31/08) exclusive of
license fees in the first two year period if the licenses were retained for their full award term.
Originally, Newdico was held 75% by Tsodilo and 25% by Trans Hex Group Limited (“THG”), with Tsodilo being the
operator. THG has funded or been attributed to its proportionate share of expenditure and these amounts have been
reflected as non-controlling interest of $214,854 (2007: $228,395) in the financial statements. During the year ended
December 31, 2008, THG decided not to fund its proportionate share of expenditures on cash calls and therefore as
of December 31, 2008, the Company’s interest in Newdico had effectively increased from 75% to 94% (2007: 93%) in
accordance with the exploration agreement between the two parties.
Trans Hex Group has also advanced funds amounting to $124,567 (2007: $205,591) to Newdico, relating to exploration
properties which have been written off in earlier years. This liability has not been recorded in these financial statements
as it is repayable only from Trans Hex Group’s share of any future earnings of Newdico after repayment of loans relating
to the Newdico Project.
23
tsodilo resources limited
3. EXPLORATION P ROPERTIES (CONTINUED)
GCWIHABA RESOURCES (PROPRIETARY) LIMITED (“GCWIHABA”) – BOTSWANA
Gcwihaba, a wholly owned subsidiary of the Company, holds prospecting licenses in the Ngamiland project area.
Diamond Exploration
Gcwihaba holds prospecting licenses in the Ngamiland District of northwest Botswana. The Company acquired the
various licenses in 2003, 2006 and 2008. The combined area totaled approximately 7,543 square kilometers as of
December 31, 2007. In June 2008, the licenses were evaluated and the Company relinquished various licenses totaling
3,230 square kilometers as those areas were determine to be non-prospective for an economic kimberlite discovery. The
terms of the remaining licenses require Gcwihaba to spend a minimum of Botswana Pula 2.06 million (approximately
$265,513 as at 12/31/08) exclusive of license fees in the period ending January 1, 2011, if the licenses were retained for
their full award term.
Base and Precious Metal Exploration
Gcwihaba holds base and precious metals prospecting licenses in the Ngamiland District of northwest Botswana. The
Company acquired the various licenses in 2005 and 2008. In total the company holds fourteen licenses totaling 10,978
square kilometers. Two of the licenses are in their first two year renewal period while the remaining licenses are in their
initial three grant period. During the year, the Company did not renew the licenses on two blocks as after evaluation
they were determined to be non prospective for containing a economic deposit of base or a precious metal. The terms
of the remaining licenses require Gcwihaba to spend a minimum of Botswana Pula 4.40 million (approximately $567,116
as at 12/31/08) exclusive of license fees in the period ending September 31, 2011, if the licenses were retained for their
full award term.
General
Title to mineral properties involves certain inherent risks due to the difficulties of determining the validity of permits and
the potential for problems arising from government conveyance accuracy, prior unregistered agreements or transfers,
native land claims, confirmation of physical boundaries, and title may be affected by undetected defects. The Company
does not carry title insurance. The Company has evaluated title to all of its mineral properties and believes, to the best of
its knowledge, that evidence of title is adequate and acceptable given the current stage of exploration.
24
tsodilo resources limited
4. PROPERTY, PLANT AND EQUIPMENT
Depreciation
Rate in Years
Cost
Accumulated
amortization
Book value
December 31, 2008
Vehicles
Furniture and Equipment
December 31, 2007
Vehicles
Furniture and Equipment
5 Years
3 Years
5 Years
3 Years
$ 887,855
111,094
$ 998,949
$ 887,855
88,608
$ 976,463
$ 436,503
77,467
$ 513,970
$ 293,688
57,326
$ 351,014
$ 451,352
33,627
$ 484,979
$ 594,167
31,282
$ 625,449
For the year ended 2008, an amount of $160,404 (2007: $172,546) of amortization has been capitalized under exploration properties.
5. SHARE CAPITAL
(a) Common Shares
Authorized
The authorized capital stock of the Company comprises an unlimited number of common shares.
Issued and outstanding
Details of the issued and outstanding common shares are as follows:
Issued and outstanding at December 31, 2006
On private placement for cash in 2007 See (i) to (v) below
Ascribed to exercise of Options
Ascribed to warrants issued in 2007
Shares
(number)
Amount
$
13,435,838
27,024,564
866,502
200,000
615,858
44,392
(261,229)
Issued and outstanding at December 31, 2007
14,502,340
27,423,585
On private placement for cash (v)
On private placement for cash (vi)
Cost of Issuance 2008
Ascribed to warrants issued in 2008
Issued and outstanding at December 31, 2008
457,901
463,492
325,000
275,000
(4,135)
-
(156,586)
15,423,733
27,862,864
25
tsodilo resources limited
5. SHARE CAPITAL (CONTINUED)
(i) Private Placement
On February 13, 2007, the Company completed a non-brokered private placement, 141,516 units of the Company (the
“Units”) were issued at a price of $0.68 (C$0.80) per Unit for proceeds to the Company of $95,869. Each Unit consists of
one common share of the Company and one warrant of the Company, each such warrant entitling the holder to purchase
one common share of the Company at a price of C$0.80 for a period of two years.
(ii) Private Placement
On May 18, 2007, the Company completed a non-brokered private placement. 167,146 units of the Company (the “Units”)
were issued at a price of $0.72 (C$0.80) per Unit for proceeds to the Company of $120,000. Each Unit consists of one
common share of the Company and one warrant of the Company, each such warrant entitling the holder to purchase one
common share of the Company at a price of C$0.80 for a period of two years.
(iii) Private Placement
On June 29, 2007, the Company completed a non-brokered private placement. 231,714 units of the Company (the “Units”)
were issued at a price of $0.75 (C$0.80) per Unit for proceeds to the Company of $175,000. Each Unit consists of one
common share of the Company and one warrant of the Company, each such warrant entitling the holder to purchase one
common share of the Company at a price of C$0.80 for a period of two years.
(iv) Private Placement
On December 19, 2007, the Company completed a non-brokered private placement, 326,126 units of the Company (the
“Units”) were issued at a price of $0.69 (C $0.70) per Unit for proceeds to the Company of $224,989. Of this amount,
91,102 units valued at $66,989 are attributed to an officer and director as an offset for accrued leave benefits as outlined
in note 8. Each Unit consists of one common share of the Company and one warrant of the Company, each such warrant
entitling the holder to purchase one common share of the Company at a price of C$0.70 for a period of two years.
(v) Private Placement
On March 11, 2008, the Company completed a non-brokered private placement, 457,901 units of the Company (the
“Units”) were issued at a price of $0.71 (C $0.70) per Unit for proceeds to the Company of $325,000. Each Unit consists of
one common share of the Company and one warrant of the Company, each such warrant entitling the holder to purchase
one common share of the Company at a price of C$0.70 for a period of two years.
(vi) Private Placement
On November 14, 2008, the Company issued, through a non-brokered private placement, 463,492 units of the Company
at a price of $0.59 (C$0.70) per unit for gross proceeds to the Company of $275,000. Each unit consists of one common
share of the Company and one warrant of the Company, each warrant entitling the holder to purchase one common
share of the Company at a price of (C$0.70) for a period of two years.
26
tsodilo resources limited
5. SHARE CAPITAL (CONTINUED)
(b) Warrants
As at December 31, 2008, the following warrants were outstanding:
Number of Warrants
Value
Expiry
Exercise
Price
Opening
Issued
[Exercised]
(Expired)
Closing
Opening
(dollars)
Issued
[Exercised]
(Expired)
Closing
(dollars)
January 27, 2008
February 21, 2008
May 4, 2008
July 19, 2008
C$1.00
C$1.00
C$0.70
C$0.70
468,776
(468,776)
319,108
(319,108)
649,984
(649,984)
161,586
(161,586)
September 21, 2008
C$0.70
791,339
(791,339)
--
--
--
--
--
146,788
146,788
109,988
109,988
167,886
167,886
49,643
49,643
459,208
459,208
--
--
--
--
--
February 13, 2009
May 18, 2009
June 29, 2009
December 19, 2009
March 10, 2010
November 14, 2010
C$0.80
C$0.80
C$0.80
C$0.70
C$0.70
C$0.70
141,516
167,146
231,714
326,126
141,516
167,146
231,714
326,126
--
--
457,901
457,901
463,852
463,852
55,047
40,408
67,829
97,945
--
--
--
--
--
--
55,047
40,408
67,829
97,945
104,958
104,958
51,628
51,628
3,257,295
(1,469,040)
1,788,255
1,194,742
776,927
417,815
During the year ended December 31, 2008, 921,753 warrants were issued and a value of $156,586 was attributed as at
December 31, 2008 (2007: 866,502 issued and a value of $261,229 was attributed). During the year ended December
31, 2008, warrants were valued using the Black-Scholes model, using key assumptions of volatility ranging from 101%
to 116% (2007: 99 to131%), a risk-free interest rate of approximately 2% (2007: 4%), a term equivalent to the life of the
warrant, and reinvestment of all dividends in the Company.
(c) Contributed Surplus
As at December 31, 2006
Relating to the expiry of warrants
Relating to stock based compensation
As at December 31, 2007
Relating to the expiry of warrants
Relating to stock based compensation
As at December 31, 2008
6,336,205
85,170
246,757
6,668,132
933,513
196,610
7,798,255
27
tsodilo resources limited
5. SHARE CAPITAL (CONTINUED)
(d) Stock Option Plan
Outstanding stock options granted to directors, offi cers and employees at December 31, 2008, were as follows:
Outstanding Granted Outstanding
Expiry
Price
December
31, 2006
[Cancelled] December Granted [Cancelled]
(Exercised)
(Exercised) 31, 2007
Outstanding Exercisable
December December
31, 2008 31, 2008
(100,000)
[50,000]
(50,000)
(50,000)
Jun e 24, 2007
C$0.15
100,000
September 18, 2007 C$0.23
100,000
December 31, 2007 C$0.41
50,000
July 8, 2008
C$0.50
100,000
January 1, 2009
C$0.75
50,000
August 31, 2009
C$0.75
200,000
January 3, 2010
C$1.85
60,000
August 15, 2010
C$1.25
260,000
January 3, 2011
C$1.25
60,000
April 24, 2011
C$0.70
300,000
August 15, 2011
C$0.70
65,000
0
0
0
100,000
50,000
200,000
60,000
260,000
60,000
300,000
65,000
November 1, 2011
C$1.00
50,000
[50,000]
0
January 2, 2012
C$1.00
May 8, 2012
C$0.80
January 2, 2015
C$0.70
May 8, 2015
C$0.70
-
-
-
-
85,000
85,000
550,000
550,000
210,000
350,000
0
0
0
[100,000]
[10,000]
[100,000]
[10,000]
[150,000]
0
[10,000]
[150,000]
(i)
(i)
(ii)
(ii)
(ii)
(ii)
(ii)
(ii)
(ii)
(ii)
(ii)
(ii)
(ii)
(ii)
(ii)
(ii)
0
50,000
200,000
50,000
160,000
50,000
150,000
65,000
0
75,000
400,000
210,000
350,000
0
0
0
0
50,000
200,000
50,000
160,000
50,000
150,000
65,000
0
75,000
400,000
105,000
175,000
Total
1,395,000
335,000
1,730,000
560,000
[530,000]
1,760,000
1,480,000
Options exercisable at end of year
Weighted average exercise price
- issued
- outstanding
- exercisable
All options have a term of fi ve years.
873,375
C$0.76
C$0.80
C$0.79
1,396,250
C$0.79
C$0.88
C$0.90
1,480,000
C$0.83
C$0.91
C$0.94
(i) These common share purchase options vest as to one-half immediately and one-half on the six-month anniversary
of the date granted.
(ii)
These common share purchase options vest as to one-quarter immediately and one-quarter on each of the six-
month, 12-month and 18-month anniversaries of the date granted.
(iii) The Company recognized an expense of $196,610 (2007: $246,757) relating to the fair value of options granted
and vesting during the year. The fair value of options granted was calculated using the Black-Scholes model, using key
assumptions of volatility ranging from 105% to 117%, a risk-free interest rate of approximately 3.5%, a term equivalent
to the life of the option, and reinvestment of all dividends in the Company.
28
tsodilo resources limited
6. INCOME TAXES
The recovery of income taxes varies from the amounts that would be computed by applying the Canadian federal and
provincial statutory rate of approximately 33.50% (Dec. 2007 – 36.12%) to income before taxes as follows:
Net loss for the period
Income tax (recovery) provision at Canadian statutory
Income tax rates
Eff ect of statutory tax rate change
Permanent diff erences
Change in valuation allowances
Expiry of tax losses
Other
Provision for (recovery of ) income taxes
Dec-31
2008
Dec-31
2007
(363,486)
33.50%
(121,768)
254,534
65,864
(666,424)
484,232
(16,438)
-
(504,075)
36.12%
(182,072)
92,943
89,129
-
-
-
-
The following summarizes the principal temporary diff erences and related future tax eff ect:
Property, Plant and Equipment
Exploration & Development - Canada
Exploration & Development - Botswana
Losses carried forward - Canada
Losses carried forward - Botswana
Other
Subtotal – fut ure income tax asset
Valuation allowance
Net future income tax asset recorded
Dec-31
2008
Dec-31
2007
29,000
20,000
(1,348,000)
539,000
1,480,000
35,000
755,000
(755,000)
8,000
93,000
(1,206,002)
1,197,000
1,294,426
35,000
1,421,424
(1,421,424)
-
-
At December 31, 2008, the Company has Canadian net operating losses carried forward that expire as follows:
Loss
Year of Expiry
322,000
383,000
505,000
198,000
227,000
210,000
2009
2013
2014
2015
2026
2027
Total assessable losses relating to the activity in Botswana as at December 31, 2008 was $5,148,331 (December 31, 2007:
$3,209,762).
7. LOSS PER SHARE
Loss per share is computed on the basis of the loss of ($363,486) for the year ended December 31, 2008 [2007: ($504,075)]
and the weighted average number of common or equivalent shares outstanding during period, December 31, 2008:
14,993,408 (2007: 13,889,166). The effects of stock options and warrants in computing diluted per share amounts for
December 31, 2008 and December 31, 2007 are anti-dilutive.
29
tsodilo resources limited
8. RELATED PARTY TRANSACTIONS
During the year, the Company borrowed funds from a person who is an officer and director of the Company. The loans are
interest free, payable upon demand and have no other terms of repayment. The amount of borrowing and repayment
for fiscal years 2008 and 2007 are as follows:
Total Amount
Borrowed
Total Amount
Repaid
Amount
Outstanding
at year end
2008
2007
$55,000
$145,000
$75,000
$20,000
$105,000
$125,000
During the years ended December 31, 2006, 2007 and 2008, the company incurred accrued annual salary (2006: $8,650,
2007: $130,000, 2008: $156,000) and leave benefits (2008: $19,024) payable to an officer and director of the company
amounting to $313,674.
Tsodilo and its wholly owned subsidiary, Tsodilo Resources Bermuda (Ltd) (“TSDB”) entered into an agreement with
Trans Hex Group and its wholly owned subsidiary Trans Hex Diamond (“THD”) with respect to their respective interests
in Newdico (Pty) Ltd. (“Newdico”). At the time of agreement (March 2002), Trans Hex Group owned 73.22% of Tsodilo.
The agreement between the parties established that all expenditures undertaken by Newdico up to and including March
31, 2002 shall be deemed to have been incurred by Newdico and funded by TSDB and THD by way of shareholders loan
account by Tsodilo as to 75% thereof; and Trans Hex as to 25% thereof.
Of the outstanding loan amounting to C$1,611,058 as at 31 March 2002, C$1,149,078 shall constitute a secondary loan,
deemed to have been advanced to the company by TSDB as to 75% thereof and THD as to 25% thereof and such secondary
loans shall only be repayable after the primary loans have been repaid to TSDB and THD in full. These secondary loans shall
be repayable before any additional secondary loans, which shall be repaid in the proportions in which they have been
advanced. Thereafter, as to the secondary loans which existed as of March 31, 2002, in proportion after the additional
secondary loans have been repaid, C$461,981 shall be deemed to have been advanced to the company by TSDB as to
75% thereof and THD as to 25% thereof (“the primary loan”). The primary loans shall be repayable in full before any parts
of the secondary loans are repayable.
The secondary loans shall not be included in the necessary calculations for purposes of the share dilution provisions. All
dilution calculations shall be based only on the value of the primary loans. All funding of the company by shareholders
for purposes of the Ngami project, shall constitute additional primary loans, or additional secondary loans in the
circumstances and to the extent set out in the parties agreement.
As of December 31, 2008, TSDB holds a 94% (2007: 93%) interest in Newdico while THD holds 6% (2007: 7%). The change
in the parties’ respective interest in the project is attributed to the dilution of THD’s interest as a result of not funding
their proportionate share of expenditures from 2002 to date. The following numbers are reflected in our records.
Long-Term:
Loan from Tsodilo Resources Bermuda Limited
Total Loan Outstanding Eliminated in Consolidation
Loan from Trans Hex Diamonds Limited (Minority Interest)
Primary
Secondary
Primary
$ 3,982,821
705,244
$ 4,668,065
$214,854
30
tsodilo resources limited
9. SEGMENTED INFORMATION
Materially all of the Company’s property plant and equipment is presently located in North America ($1,862) and
Botswana ($483,117). The geographic distribution of the property acquisition costs and exploration expenditures is
outlined in note 3.
10. FINANCIAL INSTRUMENTS
The carrying amounts reflected in the consolidated balance sheets for cash and equivalents (classified by the Company
as held for trading), accounts receivable and accounts payable and accrued liabilities approximate their fair values due
to the short maturities of these instruments. The company does not have any financial derivatives.
Risk Exposure and Management
The Company is exposed to various financial instrument risks and assesses the impact and likelihood of this exposure.
These risks include liquidity risk, credit risk, and interest rate risk. Where material these risks are reviewed and monitored
by the Board of Directors.
a. Capital Risk Management
The Company manages it capital to safeguard the Company’s ability to continue as a going concern, to provide
adequate returns to shareholders and benefits to other stakeholders, and to have sufficient funds on hand for business
opportunities as they arise.
The Company considers the items included in the shareholder’s equity as capital. The Company manages the capital
structure and makes adjustment to it in the light of changes in economic conditions and the risk characteristics of the
underlying assets. In order to maintain or adjust the capital structure, the Company may issue new shares through
private placements, sell assets, incur debt, or return capital to shareholders.
b. Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company
maintains sufficient cash balances to meet current working capital requirements. The Company is considered to be
in the exploration stage. Thus, it is dependent on obtaining regular financings in order to continue its exploration
programs. Despite previous success in acquiring these financings, there is no guarantee of obtaining future financings.
The Company’s cash is invested in business accounts with quality financial institutions and which is available on demand
for the Company’s programs, and is not invested in any asset backed commercial paper.
c. Credit Risk
Credit risk is the risk of potential loss to the Company if the counterparty to a financial instrument fails to meet it
contractual obligations. The Company’s credit risk is primarily attributable to its liquid financial assets including cash
and equivalents and amounts receivable. The Company limits exposure to credit risk on liquid financial assets through
maintaining its cash and equivalents with high-credit quality financial institutions.
The majority of the Company’s cash and cash equivalents and short term investment are held with major Canadian based fi nancial
institutions.
31
tsodilo resources limited
10. FINANCIAL INSTRUMENTS (continued)
d. Interest Rate Risk
The Company’s exposure to interest rate risk arises from the interest rate impact on its cash and cash equivalents. The
Company’s practice has been to invest cash at floating rates of interest, in cash equivalents, in order to maintain liquidity,
while achieving a satisfactory return for shareholders. There is minimal risk that the Company would recognize any
loss as a result of a decrease in the fair value of any guaranteed bank investment certificates included in cash and cash
equivalents as they are generally held with large financial institutions.
11. COMMITMENTS
All operating leases that are for a period of no longer than one year are prepaid.
The aggregate minimum lease payments are $41,980 as follows:
2009
2010
$20,478
$21,502
The lease commitment is for storage space in Maun, Botswana at an annual rental of BWP 158,880 per year for 2009 and
BWP 166,824 for 2010 converted at an exchange rate as of December 31, 2008 to US dollar.
The Company holds prospecting licenses which require the Company to spend a specified minimum amount on
prospecting over the period of the terms as outlined in note 3.
12. NOTES TO THE CASH FLOW
Net change in non-working Capital balances
Decrease / (Increase) in accounts receivable and prepaid expenses
Increase in accounts payable and accrued liabilities
Total
13. SUBSEQUENT EVENTS
Private Placement
2008
2007
$ 13,803
194,026
$ 207,829
$ 19,761
67,295
$ 87,046
On February 26, 2009, the Company issued, through a non-brokered private placement, 728,061 units of the Company at
a price of $0.79 (C$0.70) per unit for gross proceeds to the Company of $405,000, $85,000 of this amount was received
prior to December 31, 2008. Each unit consists of one common share of the Company and one warrant of the Company,
each warrant entitling the holder to purchase one common share of the Company at a price of (C$0.70) for a period of
two years.
Warrants
On February 13, 2009, 141,516 warrants expired. On February 26, 2009, 728,061 warrants were issued pursuant to the
private placement of the same date.
Stock Option Plan
On January 2, 2009, the Company issued 225,000 options at C$0.70 under its Stock Option Plan to persons who are
officers and employees of the Company.
32
tsodilo resources limited
Corpporraate Infformationn
Corporate Information
DIIRERECTCTORORSS
DIRECTORS
Jaamem s MM. Bruchhs
James M. Bruchs
WaWashhini gtgtonon, DC
Washington, DC
Appointed as director in 2002
ApA popoininteted d asas director in 20022
cGGinley
Patrick C. McGinley
PaPatrtricickk C.C. M
WaWashs ington, D.C.
Washington, D.C.
Appointed as director in 2002
Appppoinnteted d as ddirector in 20000000022
R.R. S tuuara t AnA gug s
R. Stuart Angus
VaVancouvever, British Columbia
Vancouver, British Columbia
Appointed as director in 2004
ApAppooini ted as director in 200000 4444
Joonathan R. KeLafaanntt
Jonathan R. KeLafant
Arliingn ton, Virginia
Arlington, Virginia
Appointed as director in 2007
20077
ApAAppppopop iininteted d asss d ddiririrececctotooorrrrr inininini
DaD viid d J.J. C Cuushihih ngngg
David J. Cushing
ChChevve y y ChChasase,e, MMarylylanannd d d
Chevy Chase, Maryland
Appointed as director in 2008
ApApppopopoininteed d as dirirececctototorr r ininin 2200888
OFFICERSS
OFFICERS
James M.M.M. B B Brurur chhs, BBB.SSc.., J.J.DD.
James M. Bruchs, B.Sc., J.D.
Presidennntt t anaand Chief f ExE eccututivive e OfOfffificeer
President and Chief Executive Officer
Appoinnteteted d d iin 2220000 2
Appointed in 2002
.
Gary A. Bojes, CPA, Ph.D.
Gary AA.. Boojejejess, CC PAPA, , PhPhPh.DD..
l OOfOOffificcecer r
Chief Financial Officer
Chief FFiFinaananccciaii
Appooinninteteted d dd inin 22200000077
Appointed in 2007
GaGaGailil M McGGininleleyy
Gail McGinley
Coorprporo atate e SeSecrc etetara yy
Corporate Secretary
Appointed in 2005
ApAppopoinnteted d iin 20055
COCOCORPRPPORORORORORAATATATA E E HEHEHEEEADADADADA OO OOOFFFFFFFFICICCCICEEEEEEEEE E
CORPORATE HEAD OFFICE
CCCaaanannanaaadadadadadadaa TTTTT T T ruruustst T TToowowoweerer -- B B BCCEC Plaaaacececece
Canada Trust Tower - BCE Place
1 1 1 6161616161 BB Bayayayy S S trreeeet,t B Boox 5508080
161 Bay Street, Box 508
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Toronto, Ontario M5J 2S1
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