Annual Report 2009
d
tsodilo
esources
resources
esources
limited
President’s Message
Fellow Shareholders,
On behalf of the board of directors, I am pleased
to provide this report of Tsodilo Resources Limited
(“Tsodilo”) or “the Company”) progress together
with the audited financials for the year ended
December 31, 2009.
2009 was a challenging yet defining year for the
Company. During the year we focused on positioning
the Company for the future by diligently executing
the strategic initiatives outlined in the beginning
of the year. The recession continued into 2009 and
its impact on the global capital markets impacted
the entire resource sector. Commodity prices began
to recover during the year but this has not yet
translated into increased exploration activities as
the capital markets have not yet recovered, many
other companies’ exploration programs have been
effectively abandoned due to lack of funds. However,
our decision in 2006 to acquire our own drill rig
and geophysical survey equipment allowed us to
continue our exploration activities without delay or
interruption during these difficult economic times.
We expect to accelerate our exploration, analysis
and evaluation activities in 2010. The planned
acquisition of an additional drill rig will allow us
to more than double our current meters drilled
and we expect to test five to seven kimberlites
for micro-diamonds in the first half of the year.
Sample preparation, petrography and assaying are
all ongoing on our metals projects and an active
exploration program is planned on those projects.
the Company
the past year,
During
funded
exploration activity by raising funds in the capital
markets through the successful issuance of stock by
way of private placements. This process will continue
in the coming year. Our current share base consists
of 19,710,603 issued and outstanding (25,225,278
on a fully diluted basis) common shares. Tsodilo
has a 95% interest in our Botswana Newdico (Pty)
Limited project and a 100% interest in our Botswana
Gcwihaba Resources (Pty) Limited projects.
The Company is a much stronger organization now
than it was a year ago and we are confident in our
ability to meet the challenges in the upcoming
year and for the years’ thereafter. Please follow our
progress carefully and remain informed by regular
visits to our website, www.TsodiloResources.com.
On behalf of the Board,
half of the board,
James M. Bruchs
President and Chief Executive Officer
March 19, 2010
Contents
President’s Message to Shareholders
Management’s Discussion and Analysis
of Financial Results
Financial Reporting Responsibility of
Management
Auditors’ Report to the Shareholders
Consolidated Financial Statements / Notes
Corporate Information
1
2
13
14
15
IBC
1
tsodilo resources limited
Management’s Discussion and Analysis
This management’s discussion and analysis (“MD&A”) should be read in conjunction with the Consolidated
Annual Financial Statements for the year ended December 31, 2009 and comments on the factors that affected
the Company’s performance during the periods covered by the Consolidated Annual Financial Statements
as well as the Company’s financial condition and future prospects. The Company’s functional and reporting
currency is United States dollars and all amounts stated are in United States dollar unless otherwise noted.
This management’s discussion and analysis has been prepared as at March 19, 2010.
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 exploration project in northwest Botswana.
The Company has not yet determined whether these properties contain reserves that can be economically
mined. As an exploration stage company, the recoverability of amounts shown for exploration expenditures
is dependent upon the discovery of reserves that can be economically mined, the securing and maintenance
of the interests in the properties, the ability of the Company to obtain the necessary financing to complete
the development, 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 an interest in all future dividends that may be paid by either Northbank Diamonds
Limited, Hoanib Diamonds (Proprietary) Limited or Trans Hex (Zimbabwe) Limited. In addition, the Company
was released from the long-term loans due to Trans Hex Group by the subsidiaries being sold, of $3,341,690,
and Trans Hex Group agreed to return the 10,688,137 common shares in the capital of the Company,
representing 73.22% of the issued and outstanding shares of the Company at that time, to treasury for
cancellation. The special meeting of shareholders also approved the discontinuance of the 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.
Outstanding Share Data
As of March 19, 2010, 19,710,603 common shares of the Company were outstanding. Of the options to
purchase common shares issued to eligible persons under the stock option plan of the Company, 2,335,000
options remain outstanding of which 1,827,500 are exercisable at exercise prices ranging from CAD $0.55 -
$1.25. If all options were vested and exercised, 2,335,000 common shares of the Company would be issued.
As of March 19, 2010, 4,292,821 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 $0.55 - $1.00 for
a period of two years from the date of issuance (11/14/2008 - 1/21/2010). If all warrants were converted,
4,292,821 common shares of the Company would be issued.
2
tsodilo resources limited
Principal Shareholders of the Company
The principal shareholders of the Company as of March 19, 2010 are as follows:
Name
Description
Shares / Owns,
Controls or Directs
% of the Issued and
Outstanding Shares
Preston Trust
Private Investment Vehicle
James M. Bruchs
Director, President & CEO
David J. Cushing
Director
3,923,995
2,695,983
1,915,882
19.90%
13.67%
9.72%
Subsidiaries
The Company has a 95% operating interest in its Botswana subsidiary, Newdico (Proprietary) Limited
(“Newdico”), which holds ten prospecting licenses covering approximately 9,402 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 (5%) in this project, Trans Hex
Group, is an established South African diamond mining company.
The Company has a 100% interest in its wholly owned Botswana subsidiary, Gcwihaba Resources (Proprietary)
Limited (“Gcwihaba”), which has nine diamond prospecting licenses covering approximately 6,859 square
kilometers and twenty metals (base, precious, platinum group, and rare earth) licenses covering 13,533
square kilometers.
The Company holds a 100% interest in Tsodilo Resources Bermuda Limited to which the shares of its operating
subsidiaries, Newdico and Gcwihaba, are registered.
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 high. Rivers rising off this high ground flowed westward into a
major inland sea located in the north of present-day Namibia. The Company’s diamond targets cover former
headwaters of this ancient river system and lie within the southern margin of the Congo craton.
Newdico holds ten (10) diamond Prospecting Licenses covering an area of some 9,402 square kilometers in
the northern Ngamiland Project area. Tsodilo has a 95% stake in Newdico, while Trans Hex Group, a South
African diamond mining and marketing company, holds the remaining 5%. The Company’s wholly owned
100% owned subsidiary, Gcwihaba holds nine (9) diamond prospecting licenses covering an area of some
6,859 square kilometers immediately north and adjoining the Newdico licenses. In 2009, the Company
drilled 26 holes over eight (8) primary targets and confirmed discovery of three (3) kimberlites. In addition,
a ground magnetic geophysical survey totaling 1,800 line kilometers was performed during the year.
An extensive review of the petrography and chemical chemistry of kimberlite indicator minerals (“KIM”) from
sixteen kimberlites was performed during the year and continues in 2010 for the purpose of determining
their diamond carrying capacity. A decision is expected in the second quarter as to which kimberlites will
be tested for diamond.
3
tsodilo resources limited
In 2009, the Company commissioned a review of the aeromagnetic data for both the Newdico and Gcwihaba
projects in order to enhance target selection. The report is expected to be presented in its entirety in the
second quarter of 2010. Our target selection is based on our strategy of using a combination of indicator
mineral sampling, magnetic and gravity data to generate individual targets for drill evaluation and our
regional strategy of evaluating possible transport corridors giving rise to the alluvial secondary kimberlite
indicator minerals (“KIM”) and diamond deposits at Tsumkwe and Omatako.
The favorable chemistry and diamond preservation potential of the kimberlites in our license blocks together
with the known secondary alluvial diamond discoveries down slope across the border in Namibia establish
the greater Nxau Nxau field as highly prospective with the possibility of several economic kimberlites present
within our ground. To date, 18% of the kimberlites discovered and tested for diamond in the Nxau Nxau field
are known to be diamondiferous.
Metals (Base, Precious, Platinum group, and Rare Earth) Projects
In 2005, the Company initiated an internal investigation with respect to the location of the sulphide 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 traverses 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
minds of exploration geologists and mining magnates ever since the discovery of this huge metallogenic
province revealed its copper, cobalt and uranium riches, more than 80 years ago. Drilling in 2008 located a
large mineralized zone containing Cu, Ni and Co similar to the 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.
Gcwihaba has been granted 18 prospecting licenses for metals covering an area of some 13,533 square
kilometers. The prospecting licenses are located within the nascent Okavango Rift System which is part of
the East African Rift System. The Okavango Rift System takes advantage of the pre-existing structures of the
northeast trending NeoProterozoic Pan African Orogenic Belt known as the Damara Belt.
The metals prospecting licenses are located in the northwestern part of Botswana and can be divided into
three (3) main areas:
•
•
•
The area west of the Panhandle portion of the Okavango Delta - The Panhandle Prospect
The area southwest of the Okavango Delta - The Nokaneng Prospect
The area northeast of the Okavango Delta - The Lenyanti / Kwando Prospect
The southern part of Panhandle Prospect was an obvious target as the mineralization encountered through
soil sampling was significantly elevated. The northern part of the license area was targeted purely on the
basis of the structural fabric as interpreted from the aeromagnetic data while magnetic anomalies were
targeted in the middle section
The Nokaneng prospect primarily targets are believed to be an extension of the Matchless Amphibolite in
Namibia which hosts significant copper mineralization. The Lenyanti / Kwando Prospect is a continuation of
targeting circular magnetic intrusions in the hope that they may host mineralization as discovered in the
southern part of the Panhandle Prospect.
4
tsodilo resources limited
The Damara Belt is largely hidden beneath younger sediments in northwest Botswana, such that our
knowledge of much of the geological and tectonical evolution relies on observations of the well-exposed
lithological correlatives in Namibia. The Damara belt is known as the inland branch of the Damara Orogeny
in Namibia, formed during a high angle collision of the Kalahari and Congo cratons, with the Kalahari sub-
ducting northwards below the Congo Craton. The belt is estimated to have evolved within a period spanning
from 580Ma to 505Ma.
The aeromagnetic data shows that the Damara structural trend is deflected from a northeast to a north
to northwest trend in the area around the Panhandle Prospect. This deflection, as well as our drill results,
indicates that this area is part of the Lufilian Arc structure. The Lufilian Arc hosts the world’s largest copper-
nickel-cobalt deposits in both Zambia and the Democratic Republic of Congo.
Although the geology in the study area is mostly unexposed isolated outcrops, lithological information
from boreholes and airborne geophysical data have been used by previous workers to infer the geology
underlying the Kalahari sediments.
The main basement geological units are:
Phanerozoic: the clastic (mainly diamictites, shales and sandstones) and volcanic (flood basalts) Carboniferous
to Jurassic Karoo sequences in the southeastern part of the delta area.
Neoproterozoic: siliclastic, shale, pelite and carbonate sequences of the Ghanzi Formation in the southeast
and Damara rocks in the northwest.
Mesoproterozoic: metavolcanics and metarhyolites of the Kgwebe Formation in the southeast and granite-
gneiss basement of the Kwando Complex in the central part. The Kwando Complex is not exposed; it is only
recovered from borehole logs.
Palaeoproterozoic: granitic-gneiss basement of the Quangwadum Complex in the northwest.
The Mesoproterozoic Kgwebe Formation and the Neoproterozoic Ghanzi Formation rocks form what is
known as the Ghanzi-Chobe Fold Belt in the southeastern part of the Delta, with the Kgwebe appearing at
the core of the anticlines.
Our drilling efforts have mainly concentrated in the Panhandle Prospect in license areas PL386/2008,
PL387/2008, PL388/2008 and Pl390/2008. This is primarily because of the availability of the airborne time
domain electromagnetic data which is very important for locating conductive sulfide bearing structures.
The drilling results to date can be summarized as follows:
•
•
•
•
•
•
•
23 holes were drilled in the metal licenses in 2008 totaling 4,353 meters
21 holes were drilled in 2009, totaling 3,795 meters
4 holes have been drilled to date (2010) totaling 1,200 meters
In 2008, target selection was based on magnetic anomalies
In 2009 and 2010, target selection was based on the conjunctive use of airborne electromagnetic and magnetic
data sets.
35 holes have encountered signifi cant sulphide mineralization
Identifi ed sulphides: pyrrhotite, chalcopyrite, bornite and pyrite
The conjunctive use of airborne electromagnetic and magnetic data sets has been very successful in drilling
sulfide bearing targets. Through the use of airborne electromagnetic (VTEM) data, we have been able
to delineate a belt bearing carbonaceous black shales and meta-pelites within the Damara rocks in the
5
tsodilo resources limited
northwestern Botswana. It is within this belt that we encounter sulfide mineralization within the shales and
the meta-pelites.
Our drill cores bear strong similarities with those of the nickel-cobalt-copper deposits of the Kalumbila
project in Zambia. Here, the mineralization is found within the pyrrhotite-pyrite bearing carbonaceous
shales. These shales have been correlated to the Ore Shale of the Zambian Copperbelt. The abundance of
pyrrhotite in the northern part of our Lower Panhandle Prospect is particularly promising since this sulfide
mineralization is often associated with economic nickel and cobalt deposits.
Seven hundred and fifty-two (752) samples, comprising two and one-half tons of core, have been submitted
for assays analysis and other samples have been sent out for petrography. Our targets are aimed at both
the carbonaceous shales / metapelites and circular magnetic targets (modeled as IOCG type deposits). To
this end we have an on-going high resolution ground magnetic survey (20m line spacing) in our Lower
Panhandle Prospect to reveal not only to better resolve the basement structure but also possible igneous
intrusions. We have so far completed 3,500 line kilometers of magnetic data acquisition and preliminary data
results indeed show that we are able to better map the basement fabric and igneous intrusions.
General
During the year, the Company continued 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 learning, using advanced tools and technologies to promote an interdisciplinary view and
exploration of our Earth and society, particularly in Africa. The AEON science advisory group comprises 18
members spread across four continents, five South African universities and from industry.
LIQUIDITY AND CAPITAL RESOURCES
As at December 31, 2009, the Company had net working capital (deficiency) of $102,932 (2008: ($471,355),
which included cash and equivalents $108,341 (2008: $61,827). 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 $452,000 in January 2010, see discussion in Financing Activities below. The
Company does not hedge its activities or otherwise use derivatives. At year end, the Company did not have
any material contractual obligations except for minimum spending requirements on exploration licenses.
The Company is required to spend a minimum on prospecting over the period of its licenses. On licenses
current as of December 31, 2009, the expenditure requirements inclusive of license fees from the date of
grant to and if held to their full term as well as actual and attributed expenditures with respect thereto as of
December 31, 2009, are as follows:
Project Description
Required Expenditure
Actual Expenditure
Attributed Expenditure *
Botswana Pula
USD
Botswana Pula
USD
Botswana Pula
USD
Newdico
1,594,070
$234,386
8,052,290
$1,183,980
8,052,290
$1,183,980
Gcwihaba Diamond
Gcwihaba Metals
2,882,888
6,593,456
$423,888
$969,475
1,965,239
955,955
$288,961
$140,560
6,453,727
6,670,825
$948,930
$980,852
* The Company’s Newdico subsidiary provides drilling services for the Company’s Gcwihaba subsidiary. Services performed are
accounted for at below market rates for similar services performed by third party contractors. These attributed amounts for services
are used in calculating required license expenditures.
6
tsodilo resources limited
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 of these instruments. The company does not hold financial derivatives. Due to the nature of the
Company’s operations, there is no significant credit or interest rate risk.
Operating Activities
Cash outflow used in operating activities before changes in working capital increased from $164,324 in fiscal
December 31, 2008 to $183,029 for the year ended December 31, 2009. The increase was due primarily to
office and administration expenses in 2009 being greater than 2008.
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
QUARTERLY INFORMATION
(in US Dollars)
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
Fiscal Year 2009 (ended December 31, 2009)
Total Revenues
Loss for the period
Basic and diluted loss per share
Total Assets
Total long term liabilities
Fiscal
Year
Dec.31
2009
--
(331,162)
($0.02)
(4,040)
(327,122)
($0.02)
Fiscal
Year
Dec.31
2008
--
(363,486)
($0.02)
--
(363,486)
($0.02)
5,885,208
210,814
4,725,290
214,854
--
--
Quarter 1
Quarter 2
Quarter 3
Quarter 4
--
(163,734)
($0.01)
4,246,648
228,395
--
(82,214)
--
4,989,799
211,615
--
(234,045)
($0.02)
4,220,483
228,395
--
(161,337)
($0.01)
5,151,428
262,361
--
(111,688)
($0.01)
4,337,120
228,395
--
(107,449)
($0.01)
5,339,383
277,661
--
145,981
$0.02
4,725,290
214,854
--
23,878
--
5,885,208
210,814
See accompanying notes to the consolidate fi nancial statements
Investing Activities
Cash flow applied in investing activities increased to $1,051,584 for the year ended December 31, 2009
(2008: $682,200).
7
tsodilo resources limited
Total actual expenditures of $1,038,859 on exploration properties for the period ended December 31, 2009
were attributable to the Newdico and Gcwihaba projects in northwest Botswana. Included in this amount is
the proportionate contributory share, ranging from 6.36% to 5.59% attributed to the Trans Hex Group for the
Newdico project. There were no material disposals of capital assets or investments during the year.
In December 2009, the board of directors of Newdico approved an exploration program and budget for
the period January 1, to December 31, 2010 that calls for expenditures totaling approximately Pula 9.8
million (approximately $1.45 million as of December 31, 2009). The 2010 budget envisions a micro-diamond
sampling program and analysis for up to seven different kimberlites. Trans Hex Group is presently responsible
for funding 5% 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 of the Company and one or one-half a warrant with each full such warrant entitling
the holder to purchase one common share of the Company for a purchase price equal to the unit price for a
period of two years from the date of issuance.
During the year ended December 31, 2009, the Company received gross proceeds in the amount of $1,736,400
from the issuance of units consisting of one common share and one warrant related to private placements.
Private Placement Date
No. of Units
Price per Unit
February 26, 2009
June 8, 2009
August 5, 2009
728,061
331,386
201,519
2,102,758
December 22, 2009
* $85,000 was deposited in December 2008
$0.56
$0.60
$0.60
$0.52
Proceeds
$405,000 *
$200,000
$121,400
$1,095,000
Subsequent to the fiscal period end, the Company issued, through a non-brokered private placement
465,245 units at a price of $0.97 (CAD$1.00) per unit for gross proceeds of $452,000. 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$1.00 for a period of two years. The common
shares, warrants and warrant shares are subject to a hold period of 12 months, as agreed to by the parties,
expiring on January 22, 2011. On March 1, 2010, 457,901 warrants were exercised at a price of C$0.70 for
proceeds to the Company of $304,896.
Tsodilo expects to raise the amounts required to fund its 95% 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 $327,122 in the fiscal year ended December 31, 2009
($0.02 cents per common share) compared to a net loss of $363,486 in the fiscal period ended December 31,
2008 ($0.02 cents per common share). The Company experienced an increase in office and administration
with offsets by decreases in remuneration, investor relations and stock option expenses reflecting general
corporate activity. The decrease in stock option expense reflects the timing of option grants.
8
tsodilo resources limited
Exploration expenditures including amortization of property, plant and equipment used in exploration
activities on all projects amounted to $1,202,652 during the year ended December 31, 2009 compared to
$820,118 for the year ended December 31, 2008. Exploration expenditures incurred on the Newdico project
for the year ended December 31, 2009 was $892,032 compared to $685,235 for the year ended December
31, 2008. 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 surveys of selected aeromagnetic anomalies; (c) analyzing detailed proprietary aeromagnetic
maps covering the target areas; and (d) commencement of a diamond core drilling program on selected
targets. Exploration expenditures incurred on the Gcwihaba project for the year ended December 31, 2009
were $310,620 compared to $134,883 for the year ended December 31, 2008.
PERSONNEL
At December 31, 2009, the Company and its subsidiaries employed twenty-five (25) individuals compared to
twenty-three (23) at December 31, 2008, including senior officers, administrative and operations personnel
including those on a short-term service basis.
FOURTH QUARTER – 2009
The fourth quarter was a normal operating period for a quarter and year end. Having acquired drilling
equipment and geophysical equipment in 2006 and an additional magnetometer in 2008, 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 and were offset by a gain in foreign
exchange.
RISKS AND UNCERTAINTIES
Tsodilo’s primary objective is the discovery of an economic kimberlite diamond deposit capable of rapid
advancement to feasibility stage and ultimate development as a producing property. The discovery of a
kimberlite is only the first step in the exploration process. Subsequent evaluation begins with caustic fusion
diamond analysis of the kimberlite and, if results warrant, continues through progressively larger mini-bulk
and bulk samples in order to make an increasingly accurate determination of the content and quality of
the diamonds. Early stages of kimberlite evaluation provide an initial qualitative assessment rather than an
accurate indication of either the grade of the ore body or the value per carat of the diamonds. Collection of
larger bulk samples and formal appraisal of a commercial-size parcel of diamonds are necessary to make an
accurate determination of these parameters. At any stage in the process, the results may indicate that the
deposit lacks the required economic value.
Capital Requirements
In the absence of cash flow from operations, Tsodilo relies on capital markets to fund its operations. The
ongoing exploration and eventual successful development of a diamond mine would require significant
additional financing. There can be no assurance that adequate funding will be available, or available
under terms 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 mines.
9
tsodilo resources limited
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.
Exploration Risks
The Company’s operations are subject to all the hazards and risks normally incident to the exploration,
development and mining of diamond deposits, any of which could result in damage to life or property,
environmental damage and possible legal liability for any or all damage. Whether a diamond deposit will
ultimately be commercially viable depends on a number of factors, including the particular attributes of
the deposit such as the deposit’s size; the quality and quantity of the diamonds; its proximity to existing
infrastructure; financing costs and the prevailing prices for diamonds. Also of key importance are government
regulations, including those relating to prices, taxes, royalties, land tenure, land use, the importing and
exporting of diamonds and production plant and equipment, and environmental protection. The effects of
these factors cannot be accurately predicted, but any combination of them may impede the development of
a deposit or render it uneconomic.
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 is favorable to the Company. While currency fluctuations will certainly occur throughout
2010 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 2010.
Key Personnel
The Company is dependent upon on a relatively small number of key employees, the loss of any of whom
could have an adverse effect on the Company. The Company currently does not have key personal insurance
on these 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 relinquished, or where continued exploration is deemed inappropriate, are written off in the year such
assessment is made (no such write-offs were incurred in 2008 and 2009). 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
Goodwill and Intangible Assets
In February 2008, the CICA issued Handbook Section 3064, Goodwill and Intangible Assets, replacing CICA
3062, Goodwill and Other Intangible Assets and CICA 3450, Research and Development Costs. New section
3064 addresses when an internally developed intangible asset meets the criteria for recognition as an asset.
The CICA also issued amendments to Section 1000, Financial Statement Concepts, and Accounting Guideline
AcG-11, Enterprises in the Development Stage. EIC-27, Revenues and Expenditures during the Pre-operating
10
tsodilo resources limited
Period, will not apply to entities that have adopted Section 3064. These changes are effective for fiscal years
beginning on or after October 1, 2008, with earlier adoption permitted, and were adopted by the Company
effective January 1, 2009. Collectively, these changes bring Canadian practice closer to International Financial
Reporting Standards (“IFRS”) and generally accepted accounting principles in the United States (“U.S. GAAP”)
by eliminating the practice of recognizing as assets a variety of start up, pre-production and similar costs
that do not meet the definition and recognition criteria of an asset. The adoption of this standard did not
have any impact on the consolidated financial statements of the Company.
Effective January 1, 2009, the Company adopted the EIC-174, “Mining Exploration Costs.” This EIC provides
guidance on accounting for capitalization and impairment of exploration costs. This standard was effective
for the fiscal year beginning January 1, 2009. The adoption of this EIC did not have a significant impact on
the financial statements.
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.
Tsodilo has begun the planning phase of the conversion. Existing Canadian GAAP and IFRS differences have
been identified, staff are being trained, and business impacts have not yet been determined.
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”.
11
tsodilo resources limited
RELATED PARTY TRANSACTIONS
The Company borrowed funds from a person who is an officer and director of the Company in fiscal years
2008 and 2007. The loans were interest free, payable upon demand and had no other terms of repayment.
The outstanding loans were paid throughout the year. The amount of borrowing and repayment for fiscal
years 2009, 2008 and 2007 are as follows:
Total Amount Borrowed
Total Amount Repaid
2009
2008
$ -0 -
$55,000
$105,000
$75,000
Amount Outstanding
at year end
$ -0 -
$105,000
As at December 31,2008 the Company had incurred salary payable to an officer and director of the company
amounting to $294,650. This amount was paid to the officer and director during the year ended December
31, 2009.
During the years ended December 31, 2009 and 2008, the Company incurred leave benefits (2009: $19,024,
2008: $19,024) payable to an officer and director of the Company amounting to $38,048.
OUTLOOK
Diamond and 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.
ADDITIONAL INFORMATION
Additional information relating to Tsodilo Resources Limited is available on its website www.TsodiloResources.
com or through SEDAR at www.sedar.com.
FORWARD-LOOKING STATEMENTS
The Annual Report, including this MD&A, contains certain forward-looking statements related to, among
other things, expected future events and the financial 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.
James M. Bruchs
President & CEO
March 19, 2010
Gary A. Bojes
Chief Financial Officer
March 19, 2010
12
tsodilo resources limited
Financial Reporting Responsibility of Management
financial
financial
consolidated
in this annual report
report and consolidated
The annual
financial
statements have been prepared by management.
The consolidated financial statements have been
prepared in accordance with Canadian generally
accepted accounting principles and
include
amounts that are based on informed judgments
information
and best estimates. The
is consistent
presented
statements.
the
with
Management acknowledges responsibility for the
fairness, integrity and objectivity of all information
contained
including the
consolidated financial statements. Management is
also responsible for the maintenance of financial
and operating systems, which
include effective
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.
in the annual report
for
The Board of Directors, through its Audit Committee,
is responsible for ensuring that management fulfills
its responsibilities
financial reporting and
internal control. The Audit Committee is composed
of three directors, all of whom qualify as unrelated
directors and are independent of management and
free from any interest or business relationship which
could, or could be perceived to materially interfere
with their ability to act in the best interests of the
Company. This committee meets periodically with
management and the external auditors to review
accounting, auditing, internal control and financial
reporting matters. The Audit Committee reviews
the annual financial statements before they are
presented to the Board of Directors for approval and
considers the independence of the auditors.
The financial statements for the periods ended
December 31, 2009, and 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 19, 2010
Gary A. Bojes
Chief Financial Offi cer
March 19, 2010
13
tsodilo resources limited
Auditors’ Report
To the Shareholders of Tsodilo Resources Limited:
We have audited the consolidated balance sheets
of Tsodilo Resources Limited as at December 31,
2009 and 2008 and the consolidated statements
of operations and comprehensive loss, deficit, and
cash flows for the years then ended. These financial
statements are the responsibility of the Company’s
management. Our responsibility is to express an
opinion on these financial statements based on our
audits.
We conducted our audits
in accordance with
Canadian generally accepted auditing standards.
Those standards require that we plan and perform
an audit to obtain reasonable assurance whether
the
free of material
misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also
financial statements are
includes assessing the accounting principles used
and significant estimates made by management, as
well as evaluating the overall financial statement
presentation.
these consolidated
financial
In our opinion,
statements present fairly, in all material respects, the
financial position of the Company as at December
31, 2009 and 2008 and the results of its operations
and its cash flows for the years then ended in
accordance with Canadian generally accepted
accounting principles.
Vancouver, Canada
March 19, 2010
Chartered Accountants
14
tsodilo resources limited
Tsodilo Resources Limited
Consolidated Balance Sheets
As at December 31, 2009 and 2008
(in United States dollars)
ASSETS
Current
Cash
Accounts receivable and prepaid expenses
Exploration Properties (note 3)
Property, Plant and Equipment (note 4)
LIABILITIES
Current
2009
2008
$ 108,341
67,640
175,981
5,361,645
347,582
$ 5,885,208
$ 61,827
19,491
81,318
4,158,993
484,979
$ 4,725,290
Accounts payable and accrued liabilities
$ 73,050
$ 362,673
Notes payable (note 8)
Capital subscriptions (note 13)
Non-Controlling Interest (note 3)
SHAREHOLDERS’ EQUITY
Share Capital (note 5)
Warrants (note 5b)
Contributed Surplus (note 5c)
Accumulated Other Comprehensive Income
Defi cit
Nature of operations and 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
--
--
73,050
210,814
28,696,445
1,131,904
8,221,288
(837,425)
(31,610,868)
5,601,344
$ 5,885,208
105,000
85,000
552,673
214,854
27,862,864
417,815
7,798,255
(837,425)
(31,283,746)
3,957,763
$ 4,725,290
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, 2009 and 2008
(in United States dollars)
2009
2008
$ 16,194
$ 25,026
1,332
9,028
36,058
20,470
117,769
1,421
(17,822)
146,712
(331,162)
(4,040)
$(327,122)
$(0.02)
784
13,924
42,519
23,390
80,344
2,552
(21,663)
196,610
(363,486)
-
$(363,486)
$(0.02)
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
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, 2009 and 2008
(in United States dollars)
Defi cit – Beginning of period
$(31,283,746)
$(30,920,260)
Comprehensive loss for the year
(327,122)
(363,486)
2009
2008
Defi cit - End of year
$(31,610,868)
$(31,283,746)
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, 2009 and 2008
(in United States dollars)
Cash provided by (used in):
Operating Activities
Loss for the year
Adjustments for non-cash items:
Amortization
Non-controlling interest
Stock-based compensation
Net change in non-cash working capital balances (note 12)
Investing Activities
Additions to exploration properties
Additions to property, plant and equipment
Financing Activities
Proceeds from shareholder loan
Repayment of shareholder loan
Capital subscriptions
Shares issued for cash, net of cost
Change in non-controlling interest
Change in cash - For the year
Cash - beginning of year
Cash - end of year
2009
2008
$ (327,122)
$ (363,486)
1,421
(4,040)
146,712
(183,029)
(337,772)
(520,801)
(1,038,859)
(12,725)
(1,051,584)
-
(105,000)
-
1,723,899
-
1,618,899
46,514
61,827
$ 108,341
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
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, 2009 and 2008
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 exploration 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, 2009, the Company reported an accumulated deficit of $31,610,868 [2008: $31,283,746]
and negative net cash outflows from operations before changes in working capital of $183,029 [2008:
$164,324] for the year then ended and current required exploration property license commitments (which
may be reduced by relinquishing licenses prior to the expiry of their call term) of approximately $1.7 million.
Accordingly, the cash position of the Company is insufficient to finance continued exploration. 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.
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 or if the necessary financing cannot be raised.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of consolidation and preparation of the consolidated fi nancial 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 the following
direct and indirect subsidiaries:
Tsodilo Resources Bermuda Limited (TRBL) [Bermuda]
Gcwihaba Resources (Proprietary) Ltd (“Gcwihaba”) [Botswana]
Newdico (Proprietary) Limited (“Newdico”) [Botswana]
All intercompany transactions have been eliminated on consolidation.
2009
100%
100%
95%
2008
100%
100%
94%
18
tsodilo resources limited
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Earnings (loss) per share
Basic loss per share is calculated using the weighted average number of shares outstanding during the year.
Earnings per share calculations are based on the weighted average number of common shares and common
shares equivalents issued and outstanding during the year. Diluted earnings per share are calculated using the
treasury method which requires the calculation of diluted earnings per share by assuming that outstanding
stock options and warrants with the average market price that exceeds the average exercise prices of the
options and warrants for the year are exercised and the assumed proceeds are used to repurchase shares of
the Company at the average market price of common shares for the year.
Use of estimates
The preparation of financial statements in accordance with Canadian generally accepted accounting
principles 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 financial
statements and the reported amounts of revenues and expenses during the period. Actual results could
differ from those estimates.
Significant accounts that require estimates relate to the possible impairment of property, plant and
equipment and mineral property interest, the useful life of property, plant and equipment, valuation
allowances for future income taxes, valuation of investments, valuation of stock-based compensation and
warrants in private placements and valuations of asset retirement obligations.
Exploration properties
All direct and indirect 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. Exploration costs that do not relate to specific non-producing mining properties are expensed
as incurred.
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.
On an ongoing basis the capitalized costs are reviewed to consider if there is any impairment on the subject
mineral property interest. The Company conducts this evaluation on a project specific basis as opposed to
treating each individual license block as a separate project. If a property is 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 is amortized on a straight-line basis over its estimated useful life of three to
five years.
19
tsodilo resources limited
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Cash
Cash consist of cash held in banks.
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 and are translated into the US dollar equivalent using the temporal
method. 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 assets and liabilities denominated in foreign
currencies are translated to at the exchange rate in effect at the balance sheet date 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 rates approximating those in effect at the time of the transaction. 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 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.
Stock-Based Compensation Plans
The Company 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
An asset retirement obligation is a legal obligation associated with the retirement of tangible long-lived
assets that the Company is required to settle. The Company recognizes the fair value of the liability for an
asset retirement obligation in the year in which it is incurred and when a reasonable estimate of fair value
can be made. The carrying amount of the related long-lived asset is increased by the same amount as the
liability. The Company currently does not have any material asset retirement obligations.
Financial Instruments and Comprehensive Income
Financial instruments are classified into one of five categories: held-for-trading, held-to-maturity, loans
and receivables, available-for-sale financial assets or other financial liabilities. All financial instruments,
20
tsodilo resources limited
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
including derivatives, are measured in the balance sheet at fair value at the date of acquisition. Subsequent
measurement and accounting for changes in fair value will depend on the initial classification, as follows:
(i) held-for-trading fi nancial assets are measured at fair value and changes in fair value are recognized in net income;
(ii) available-for-sale fi nancial instruments are measured at fair value with changes in fair value recorded in other
comprehensive income until the investment is no longer recognized or impaired, at which time the amounts
would be recorded in net income (loss); and
(iii) loans and receivables, held-to-maturity investments and other fi nancial liabilities, are measured at amortized
cost.
The Company designated its cash as held-for-trading, which is measured at fair value. Amounts receivable
are classified as loans and receivables, which are measured at amortized cost. Accounts payable and accrued
liabilities are classified as other financial liabilities, which are measured at amortized cost.
Transaction costs directly attributable to the acquisition or issuance of financial instruments are recognized
in net income (loss) in the period incurred.
ADOPTION OF NEW ACCOUNTING STANDARDS
New Accounting Pronouncements
Goodwill and Intangible Assets
In February 2008, the CICA issued Handbook Section 3064, Goodwill and Intangible Assets, replacing CICA
3062, Goodwill and Other Intangible Assets and CICA 3450, Research and Development Costs. New section
3064 addresses when an internally developed intangible asset meets the criteria for recognition as an asset.
The CICA also issued amendments to Section 1000, Financial Statement Concepts, and Accounting Guideline
AcG-11, Enterprises in the Development Stage. EIC-27, Revenues and Expenditures during the Pre-operating
Period, will not apply to entities that have adopted Section 3064. These changes are effective for fiscal years
beginning on or after October 1, 2008, with earlier adoption permitted, and were adopted by the Company
effective January 1, 2009. Collectively, these changes bring Canadian practice closer to International Financial
Reporting Standards (“IFRS”) and generally accepted accounting principles in the United States (“U.S. GAAP”)
by eliminating the practice of recognizing as assets a variety of start up, pre-production and similar costs
that do not meet the definition and recognition criteria of an asset. The adoption of this standard did not
have any impact on the consolidated financial statements of the Company.
Effective January 1, 2009, the Company adopted the EIC-174, “Mining Exploration Costs.” This EIC provides
guidance on accounting for capitalization and impairment of exploration costs. This standard was effective
for the fiscal year beginning January 1, 2009. The adoption of this EIC did not have a significant impact on
the Company’s consolidated financial statements.
Future Changes in Accounting Policies
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
21
tsodilo resources limited
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
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”.
3 . EXPLORATION PROPERTIES
Exploration properties are summarized as follows:
Newdico
Botswana
Gcwihaba
Botswana
Total
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
Jan. to Dec 2009 expenditures
892,032
310,620
1,202,652
Balance at December 31, 2009
$4,679,034
682,611
$5,361,645
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 which 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 did 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 1.6 million (approximately $234,386 as at 12/31/09) inclusive of license
fees from the date of grant to and if the licenses were held to their full term.
22
tsodilo resources limited
3. EXPLORATION PROPERTIES (continued)
Originally, as a result of an agreement completed on March 31, 2002, Newdico was held 75% by Tsodilo and
25% by Trans Hex Group Limited (“THG”) with Tsodilo being the operator. Both Tsodilo and THG funded their
initial investments in the Ngami property held by Newdico through a combination of an equity interest
and a primary loan interest. Based on the terms of the equity and primary loan interests, THG’s interest in
Newdico has been accounted for as a non-controlling interest. At December 31, 2009, the amount reflected
ass non-controlling interest was $210,814 (2008: $214,854).
Starting in 2005, THG decided not to fund its proportionate share of expenditures on certain cash calls.
Accordingly, the Company’s interest in Newdico increased from 75% to 94% at December 31, 2008. During
the year ended December 31, 2009, THG did not fund its proportionate share of expenditures on cash calls,
and therefore, the Company’s interest in Newdico increased to 95% at December 31, 2009 in accordance
with the agreement between the two parties.
Trans Hex Group has also advanced funds, designated as a secondary loan, amounting to $287,270 CAD
($273,750 as at 12/31/09; 2008: $234,938) to Newdico, relating to exploration properties which had been
written off prior to March 31, 2002. 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.
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 eight precious stone – diamond prospecting licenses in the Ngamiland District of northwest
Botswana. The Company acquired the various licenses in 2007, 2008 and 2009. The combined area totaled
approximately 6,860 square kilometers as of December 31, 2009. The terms of the licenses require Gcwihaba
to spend a minimum of Botswana Pula 2.88 million (approximately $423,888 as at 12/31/09) inclusive of
license fees from the date of grant to and if the licenses were held to their full term.
Base and Precious Metal Exploration
Gcwihaba holds eighteen metal (base, precious, platinum group, and rare earth) prospecting licenses in the
Ngamiland District of northwest Botswana. The Company acquired the various licenses in 2008 and 2009.
In total, the company holds twenty licenses totaling 13,500 square kilometers. The terms of the licenses
require Gcwihaba to spend a minimum of Botswana Pula 6.6 million (approximately $969,475 as at 12/31/09)
inclusive of license fees from the date of grant to and if the licenses were held to their full 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.
23
tsodilo resources limited
4. PROPERTY, PLANT AND EQUIPMENT
December 31, 2009
Amortization
Rate in Years
Accumulated
Cost
amortization
Book value
Vehicles
5 Years
$887,855
$571,018
$ 316,837
Furniture and Equipment
3 Years
123,819
93,074
30,745
$ 1,011,674
$ 664,092
$ 347,582
December 31, 2008
Vehicles
Furniture and Equipment
5 Years
3 Years
$ 887,855
$ 436,503
$ 451,352
111,094
$ 998,949
77,467
$ 513,970
33,627
$ 484,979
For the year ended 2009 an amount of $147,952 (2008: $160,404) 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 with no par
value.
Issued and outstanding
Details of the issued and outstanding common shares are as follows:
Issued and outstanding at December 31, 2007
On private placement for cash (i)
On private placement for cash (ii)
Share issue costs
Ascribed to warrants issued in 2008
Issued and outstanding at December 31, 2008
On private placement for cash (iii)
On private placement for cash (iv)
On private placement for cash (v)
On private placement for cash (vi)
Share issue costs
Ascribed to warrants issued in 2009
Issued and outstanding at December 31, 2009
24
tsodilo resources limited
Shares
(number)
14,502,340
457,901
463,492
-
-
15,423,733
728,061
331,386
201,519
2,102,758
-
-
18,787,457
Amount
$
27,423,585
325,000
275,000
(4,135)
(156,586)
27,862,864
405,000
200,000
121,400
1,095,000
(12,501)
(975,318)
28,696,445
5. SHARE CAPITAL (continued)
(i) 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.
(ii) 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.
(iii) Private Placement
On February 26, 2009, the Company issued, through a non-brokered private placement, 728,061 units of the
Company at a price of $0.56 (C$0.70) per unit for gross proceeds to the Company of $405,000. 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.
(iv) Private Placement
On June 8, 2009, the Company issued, through a non-brokered private placement, 331,386 units of the
Company at a price of $0.60 (C$0.70) per unit for gross proceeds to the Company of $200,000. 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.
(v) Private Placement
On August 5, 2009, the Company issued, through a non-brokered private placement, 201,519 units of the
Company at a price of $0.60 (C$0.70) per unit for gross proceeds to the Company of $121,400. 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.
(vi) Private Placement
On December 22, 2009, the Company issued, through a non-brokered private placement, 2,102,758 units of
the Company at a price of $0.52 (C$0.55) per unit for gross proceeds to the Company of $1,095,000. 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$0.55) for a period of two years.
25
tsodilo resources limited
5. SHARE CAPITAL (CONTINUED)
(b) Warrants
As at December 31, 2009, the following warrants were outstanding:
Number of Warrants
Value
December
31, 2008
Exercise
Price
Issued
[Exercised]
(Expired)
December
31, 2009
December
31,2008
December
31, 2009
Issued
[Exercised]
(Expired)
Expiry
Feb ruary 13, 2009
C$0.80
141,516
(141,516)
May 18, 2009
C$0.80
167,146
(167,146)
June 29, 2009
C$0.80
231,714
(231,714)
December 19, 2009
C$0.70
326,126
(326,126)
--
--
--
--
$55,047
$(55,047)
$ --
40,408
(40,408)
67,829
(67,829)
97,945
(97,945)
--
--
--
March 10, 2010
C$0.70
457,901
November 14, 2010
C$0.70
463,852
--
--
457,901
104,958
463,852
51,628
--
--
104,958
51,628
February 26, 2011
C$0.70
June 3, 2011
C$0.70
August 4, 2011
C$0.70
December 22, 2011
C$0.55
--
--
--
--
728,061
728,061
331,386
331,386
201,519
201,519
2,102,758
2,102,758
--
--
--
--
157,751
157,751
104,159
104,159
60,056
60,056
653,352
653,352
1,788,255
2,497,222
4,285,477
$417,815
$714,089
$1,131,904
On February 13, 2009, 141,516 warrants expired. On May 18, 2009, 167,146 warrants expired. On June 29,
2009, 231,714 warrants expired. On December 19, 2009, 326,126 warrants expired. During the year ended
December 31, 2009, warrants were valued using the Black-Scholes model, using key assumptions of volatility
ranging from 139% to 170% (2008: 101% to 116%), a risk-free interest rate ranging from approximately 0.9%
to 1.42% (2008: 2%), a term equivalent to the life of the warrant, and a dividend rate of zero percent.
(c) Contributed Surplus
As at December 31, 2007
Relating to the expiry of warrants
Relating to stock based compensation
As at December 31, 2008
Relating to the expiry of warrants
Relating to stock based compensation
As at December 31, 2009
$6,668,132
933,513
196,610
7,798,255
261,229
161,804
$8,221,288
26
tsodilo resources limited
5. SHARE CAPITAL (CONTINUED)
(d) Stock Option Plan
Outstanding stock options granted to directors, officers and employees at December 31, 2009, were as
follows:
Outstanding
Granted
Outstanding
Outstanding
Exercisable
December
[Cancelled]
December
Granted
[Cancelled]
December
December
Expiry
Price
31, 2007
(Exercised)
31, 2008
(Exercised)
31, 2009
31, 2009
July 8, 2008
C$0.50
100,000
[100,000]
January 1, 2009
C$0.75
50,000
[50,000]
August 31, 2009
C$0.75
200,000
[200,000]
0
0
0
January 3, 2010
C$1.85
60,000
[10,000]
50,000
August 15, 2010
C$1.25
260,000
[100,000]
160,000
January 3, 2011
C$1.25
60,000
[10,000]
50,000
April 24, 2011
C$0.70
300,000
[150,000]
150,000
August 15, 2011
C$0.70
65,000
0
65,000
January 2, 2012
C$1.00
85,000
[10,000]
75,000
May 8, 2012
C$0.80
550,000
[150,000]
400,000
January 2, 2013
C$0.70
May 8, 2013
C$0.70
January 2, 2014
C$0.70
May 3, 2014
C$0.70
November1, 2014 C$0.55
-
-
-
-
-
210,000
210,000
350,000
350,000
-
-
-
-
-
-
225,000
360,000
100,000
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(ii)
(ii)
(ii)
0
0
0
0
0
0
50,000
50,000
160,000
160,000
50,000
50,000
150,000
150,000
65,000
65,000
75,000
75,000
400,000
400,000
210,000
210,000
350,000
350,000
225,000
112,500
360,000
180,000
100,000
25,000
Total
1,730,000
[220,000]
1,510,000
685,000
0
2,195,000
1,827,500
Options exercisable at end of year
1,396,250
1,480,000
Weighted average exercise price
- issued
- outstanding
- exercisable
C$0.79
C$0.88
C$0.90
C$0.83
C$0.91
C$0.94
All options have a term of five years.
27
tsodilo resources limited
1,827,500
C$0.68
C$0.80
C$0.83
5. SHARE CAPITAL (CONTINUED)
These common share purchase options vest as to one-quarter immediately and one-quarter on each
(i)
of the six-month, 12-month and 18-month anniversaries of the date granted.
On January 2, 2009, May 4, 2009, and November 1, 2009 the Company under its Stock Option Plan
(ii)
issued 225,000 options at C$0.70, 360,000 options at C$0.70, and 100,000 options at C$0.55 respectfully to
persons who are directors, officers and employees of the Company.
The Company recognized an expense of $146,712 (2008: $196,610) relating to the fair value of options
granted and vesting during the year. In addition, $15,092 of stock-based compensation was capitalized into
exploration properties. The fair value of options granted was calculated using the Black-Scholes model, using
key assumptions of volatility ranging from 115% to 133%, risk-free interest rates ranging from approximately
1.7% to 2.3%, a term equivalent to the life of the option, and a dividend rate of zero percent.
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 33.00% (Dec. 2008 – 33.50%) 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
Foreign operation taxed at lower rates
Permanent diff erences
Change in valuation allowances
Expiry of tax Losses
True up and foreign exchange
Other
Dec-31
2009
$(327,122)
33.00%
(107,950)
84,820
7,924
41,200
254,376
271,477
(547,723)
(4,124)
Dec-31
2008
$(363,486)
33.50%
(121,768)
254,534
-
65,864
(666,424)
484,232
-
(16,438)
Provision for (recovery of ) income taxes
$ -
$ -
The following summarizes the principal temporary diff erences and related future tax eff ect:
Property, Plant and Equipment - Canada
Property, Plant and Equipment - Botswana
Exploration & Development - Canada
Exploration & Development - Botswana
Losses carried forward - Canada
Losses carried forward - Botswana
Other
Subtotal – future income tax asset
Valuation allowance
Dec-31
2009
Dec-31
2008
$ 16,000
$ 29,000
51,000
20,000
(1,227,000)
626,000
1,485,000
38,000
1,009,000
(1,009,000)
-
20,000
(1,348,000)
539,000
1,480,000
35,000
755,000
(755,000)
Net future income tax asset recorded
$ -
$ -
28
tsodilo resources limited
6. INCOME TAXES (CONTINUED)
At December 31, 2009, the Company has Canadian net operating losses carried forward that expire as follows:
Loss
371,000
436,000
855,000
335,000
235,000
124,000
133,000
Year of Expiry
2013
2014
2015
2026
2027
2028
2029
Total assessable losses relating to the activity in Botswana as at December 31, 2009 were $5,939,979
(December 31, 2008: $5,148,331).
7. LOSS PER SHARE
Loss per share is computed on the basis of the loss of ($327,122) for the year ended December 31, 2009 [2008:
($363,486)] and the weighted average number of common or equivalent shares outstanding during period,
December 31, 2009: 16,366,665 (2008: 14,993,408). The effects of stock options and warrants in computing
diluted per share amounts for December 31, 2009 and December 31, 2008 are anti-dilutive.
8. RELATED PARTY TRANSACTIONS
The Company borrowed funds from a person who is an officer and director of the Company in fiscal years
2008 and 2007. The loans were interest free, payable upon demand and had no other terms of repayment.
The outstanding loans were paid throughout the year. The amount of borrowing and repayment for fiscal
years 2009, 2008 and 2007 are as follows:
Total Amount Borrowed
Total Amount Repaid
Amount Outstanding at year end
2009
2008
$ -0 -
$55,000
$105,000
$75,000
$ -0 -
$105,000
As at December 31, 2008 the Company had incurred salary payable to an officer and director of the company
amounting to $294,650. This amount was paid to the officer and director during the year ended December
31, 2009.
During the years ended December 31, 2009 and 2008, the Company incurred leave benefits (2009: $19,024,
2008: $19,024) payable to an officer and director of the Company amounting to $38,048.
29
tsodilo resources limited
9. SEGMENTED INFORMATION
Materially all of the Company’s property plant and equipment at December 31, 2009 is located in North
America of $442 (2008: $1,862) and Botswana of $347,140 (2008: $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 Management
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a
going concern in order to pursue the development and exploration of its mineral properties and to maintain
a flexible capital structure which optimizes the costs of capital at an acceptable risk.
The Company depends on external financing to fund its activities. The capital structure of the Company
currently consists of common shares, stock options and share purchase warrants. The Company manages
the capital structure and makes adjustments to it in light of changes in economic conditions and the risk
characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt
to issue new shares, acquire or dispose of assets or adjust the amount of cash on hand.
In order to facilitate the management if its capital requirements, the Company prepares annual expenditure
budgets, which are approved by the Board of Directors and updated as necessary depending on various
factors, including capital deployment and general industry conditions.
The Company anticipates continuing to access equity markets to fund continued exploration of its mineral
properties and the future growth of the business.
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
30
tsodilo resources limited
10 FINANCIAL INSTRUMENTS (CONTINUED)
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 a major
Canadian based financial institution.
d. Interest Rate Risk
The Company’s exposure to interest rate risk arises from the interest rate impact on its cash. Because the
cash is held on deposit at financial institutions and may be withdrawn at any time, the Company’s exposure
to interest rate risk is not significant.
11. COMMITMENTS
All operating leases that are for a period of no longer than one year are prepaid.
The aggregate minimum lease payments are $150,858 as follows:
2011
2012
2013
2014
2015
24,530
24,530
25,756
25,756
25,756
* Payment for 2010 lease obligation was made in December 2009
The lease commitment is for storage space in Maun, Botswana at an annual rental of BWP 166,824 per year
for 2010 through 2012 and BWP 175,165 for years 2013 through 2015 converted at an exchange rate as of
December 31, 2009 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.
31
tsodilo resources limited
12. NOTES TO THE CASH FLOW
Net change in non-working Capital balances
Decrease / (Increase) in accounts receivable and prepaid expenses
$ (48,149)
Increase in accounts payable and accrued liabilities
Total
(289,623)
$ (337,772)
$ 13,803
194,026
$ 207,829
December 31
December 31
2009
2008
13. SUBSEQUENT EVENTS
Private Placement
On January 22, 2010, the Company issued, through a non-brokered private placement, 465,245 units of the
Company at a price of $0.97 (C$1.00) per unit for gross proceeds to the Company of $452,000. 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$1.00) for a period of two years.
Warrants
On January 22, 2010, 465,245 warrants were issued pursuant to the private placement of the same date.
On March 1, 2010, 457,901 warrants were exercised at a price of C$0.70 for proceeds to the Company of
$304,896.
Stock Option Plan
On January 10, 2010, the Company issued 190,000 options at C$1.00 under its Stock Option Plan to persons
who are officers and employees of the Company.
32
tsodilo resources limited
CCCCoorrrrpppppoooooorrrrraaaaaatttttttteeeeee IIIIIIIIIIInnnnnnnnnnnnffffffffffffffooooooorrrmmmmaaaaaaaaaaaaaaaaaaaaatttttttttttttttttttttiiiiiiiiiiiiiioooooooooooooooooooonnnnnnnn
Corporate Information
DIDIID REREREECTCTCTTOROROORRORORSSS SSS S SS SS
DIRECTORS
James M. Bruchs
JaJaJ mememees sss M.M.M.M.MMM.. B BB BBB BB rururururururrur cchchcchhhhhhhchsss
WaWaWaWashshshshhininnninngtgtgtgggtgttononnon, ,, DCDCDCDDDCCCCDCCCDCD
Washington, DC
Appointed as director in 2002
2222 2 222000000000000000000000000000000000000000222222222222222222222222222
ApApAppopopoooininintetetetetett d ddddd ddd d d asasasasasasaasasas d d d ddddiiririrrrrirrecececcececeeeee ttototototototorr r innnini
Patrick C. McGinley
leleleleeeyyy yyy
cGcGcGcGGcGcccccGGinininininiiii
PaPaPPaP trtrtrtrtriccicicck kkkk C.CC.C.C.. MMMMMMMMMMMMM
WaWaWaWaashshshshs ininingtgtgtgttg ooononnnooo , ,,,,, DDDDD..D.DD.DDDD CC.C.CC.C
Washington, D.C.
Appointed as director in 2002
ApApppopopopopoiinininini tettetetteddd dddd asaasasassa dd dddddddddiriiririririiirireeeceecccccccccce tototoooototooootototor rrrrrrrr r iinininninnnniiiii 2 22 22222222 2 2 2 2 2 00000000000000000000000022222222222222
R. Stuart Angus
R.R.R.R. S S S SSStuttututuuuuarararaarrrt tt t AAnnnnnAnAAnAAAAAA gugugugugguuguguguusssssssssss
VaVaVaVaVancncncncncn ouououuuouuuveveveveeveer,r,rrr,r, B B BBBBBBBBBBriririririrrritttttiiittiitititishshshshshhshss CCC C CCCCC CCooloololololumumummmmmmmmmmmmmmbibibbibibibiiibibibibib aa a aaaaaaaaaaaa aaaaaaa
Vancouver, British Columbia
Appointed as director in 2004
ApApApAApAA popopopopopoopopp ininnininini teteeteetett d dddd ddd asasasasasassasasas d d d d dddd d diiirirriririirrrrirecececececececctototototott rrr r r iininin 2 22222222222222200000000000000000000000000000000000 4444444444444444
Jonathan R. KeLafant
. KKeKeKeKeKeKKeKKeK LaLaLaLaLaLaLLaLaaL ffafafafafafaff ntnttn
JoJJJoJJoJoJ nannnnan ththhhthhhananananan R RRRRRR
ArArArArArAArrrrAA lililll ngngngngngnggggggtotototooonnn,nn,n V V VV VVVViriririrrrrii gigiggigigggig nininininiiiniiniiaaaaaaaaaa
Arlington, Virginia
Appointed as director in 2007
ApApApApApAAppopopopopoininininnninnnteteteteteteed d d ddd aasassasasaassasas dd dddddddirirririrrrececececeececccttototooottttot r r r iniiiniinnnninniin 2 2 2222 2222222200000000000000000000000000000000000000000000000077777777777777777777
DDaDaDaDaDaDaDaDaDaDaDaD vivivivivivivviivid dd dd d dd J.JJ.J.JJ.J CCC C CCC Cuusssssusssssssussssshihihihhhihihiiihhhiingnngngngngnngn
David J. Cushing
hChChChChChheveveveveve yy yy y y ChChCCChChChChChChasasassssasssasaaaa e,eeeeeee,e,e,e,,,, M M MMMMMMMMarararararararaaaarylylylylyyylyly aaaananannnnananaa d d d ddd d
Chevy Chase, Maryland
Appointed as director in 2008
ApApAApAppopopopopooininininnnteteteteed d d d d ddd asasassasass ddddddddddd d diririrrrirrreeeeecececceccectototototootor rrr r inininininnnnniininininn 2 2 2 222 222222 200000000000000 888
MMiMiMiMMiMiM chchchcchcchchieieieiieeiieeeiel l l l C.C.C.C.C. J JJ .. deddedededdd W W W W WWWWitititititiit
Michiel C. J. de Wit
PrPrPPrPrPrPPPP etetetetetetoooorororiaaaiaia, , , SoSoSoSoSoSoooooututuuuuttuu h h hh AAfAfAfAfAfAfAA ririrrir cacacacacaaaa
Pretoria, South Africa
ApAppApAppppopopopoppp ininininteteteted d d d d asaaaaasasasas d dddd dddiririrririreceececcece tototoootoootooor rr rr rrrrr ininininnnnn 22 222222 2220000000000000000000000000000 9999
Appointed as director in 2009
OFFICERS
OFOOFOFFFOFFOFO FIFIIIFIF CECECECECECECECEERRRRSRSRSRSRSRSRSSSSSSSSSS
James M. Bruchs, B.Sc., J.D.
JJaJaJaJJamemememememees s ss M.MMM.MM.MMM.MMM. B B BBB BBB BBBrurrrruruuuuururururrrruucchchhchchcc ss,s, BBBBBBB B.S.S.SSSScccc.cccc.c., ,,,, J.J.J.J.J.JJJJ DD.D.D.DDDD
PrPrPrrresesesesesee ididididdddenenenenenenenent ttt tt t ananananaand dd d d ChChChChhCCChC ieieeieeef ffff ExEExEExE eececce ututututututtttivivivivivivivvvvvvvvvee e eeeeeee OOOfOfOOOfOOfOfOfOOfOffiffififififffffifficeccececececececececececeeeeecececceeceec r r rrrrrrrrrrr rrrrr
President and Chief Executive Officer
ApAppApApppppppopopoppopopopop iniiniini ttetetetedd dd d ininininnn 2 2 22 2 200000000002 22 22 22 22
Appointed in 2002
Gary A. Bojes, CPA, Ph.D.
.. BoBoBoBoooBooBoB jejejejjees,ss, CC CCPAPAPAAAAAA,, , ,, PhPhPhhhhPhhh.D.DDDDDDDDDDDDD.D.D.DD..D....
GGGaaGGGG ryryyyryy AA A A
ChChChCC ieieieief f fff FiFiFiFiFiiF nananaann ncncncncn iaiaial ll ll OfOfOfOfOfOOffifififififf cececceeecer rr rr r r
Chief Financial Officer
ApApAAppApApApAAA popoopoppop ininnintetetetetet ddd d ininininnn 2 2 22 2222 2200000000000000000000000 7777777
Appointed in 2007
GGGGGGaGaGaGGaGaGaGaGaGaGaGGGaGGGailililili MMMM M M MMMMMcGcGGcGcGGcGGcccGGGc inininniniiiniiininiininleleleleley yy yyyy
Gail McGinley
CCoCCoCCCoCooCoCoCCCCoooCoCooorprpprprrprrprrprrprprprpprrpppppppppoorooorororooooooooo atatatatatatatttataaaaaatee ee e e ee eee SeSSSeSeSeSeSSeeSeSeSeSSS cccrcrcrcccccc eeteteetete araarararyyyyyyy
Corporate Secretary
Appointed in 2005
ApApApAAAAAApAA popopopoopopoopopooooooooininininnnininininninintetttetetetetteetttttttettetteettteteeteted d ddd dd dd dddd ininininiinininininnn 2222 2 2 2 2 22220000000000000000000000055555555555555555
COCOCOCOCOCOOOCOOOORPRPRPRPRPRPRR OROROOROROOROO ATATATATATATTTTTTATE E E E EE EEE HEHEHEHEHEHHEHHH ADADADADADADADADADDDADDDDDD O O O O OOOOOOFFFFFFFFFFFFFFFF ICICICICICICICICICICCICI E E E EEEEEE E
CORPORATE HEAD OFFICE
CaCaCaCCaCaCananananananan dadadadadad TT TT TTTTTTTrurururururuuustststststs TT T TTTT owowowowowoowo ererererererr -- ------- B BBB B B B BB CECECECECCE P P PPlalalaacecececeeeceeeeeee
Canada Trust Tower - BCE Place
11 1 1 1111616161616161 B B BBBBBBBayayayaya SS S SSSStttrtrtrttrt eeeeeeeeeeeeeet,t,tt,tt, B BBBBB Boxoxoxoxxox 5 555508080888
161 Bay Street, Box 508
ToToToToToToTooTTTT rorrorororor ntntntntnttoooo,o,o,o,oo O O O OOnntntntntntntarararaarrioioioio M M MM5J5J5J5J5J55J5J 2 2 22 22S1S1S1S11
Toronto, Ontario M5J 2S1
TeTeTeTeTeleleleleephphphphhhphhphononononononooo e:e:ee:e:e ( ( ( ((4141414414 6)6)6)6)66) 5 5 5 5 5 572727272227 -2-2-2- 0303030300333 3 33 3333 33
Telephone: (416) 572-2033
FFaFaFaF cscsssimimimimilililili e:e:e:e:ee:ee:e ( ( ( ( (((((4141414141414144 6)6)6)6)) 9 9 9 99987878787877-4-4-444443636363666363 9 999999
Facsimile: (416) 987-4369
Website: www.TsodiloResources.com
WeWeWeWeWeeeebsbsbsbsbsbssbsbsitititititttttttttte:e:e:ee: wwwwwwwwwwwwwwww.w.w.w.w.ww.www.w TsTsTsTsTsTTsTT odoodddodoooo ililililililiililoRoRoRoRoRoRResesesese ouououououurcrrrcrcesesesesse .c.c.cc.ccomomommmmommommmm
E-E-E-E-E-E-MaMaMaMaMaMMaMaiililililii : : ::: : inininininnnnnfofofoofofooo@T@@T@T@@@@T@@T@T@T@@@ sososososossodidididididdidididdd lolllololololl ReReReReResosososoourururuuuru ceceeececeec s.s.s.s.s.cococococoommmmm
E-Mail: info@TsodiloResources.com
AUDITORS
AUAUAUAUAUAUUAAAAUDIDIDIDIDDDIDIDIDD TOTOTOTOTOTOTOOOOTTOORSRSRSRSRSRSRRSR
ErErErErErErErnsnsnsnsnsnsnst t t t t & & & &&& && YoYoYoYoYooYoYYYoYYYYYYY uuuununuununnnnunuununnuunuungg,ggg,g,g,g,gggg,g,gg,g,, L LLLLL LLL LLLLLPLPLPLPLPLLPPLLPLLPPPPLP
Ernst & Young, LLP
VaVaVaVaVaVaVaaanncncncncncnccououououo veveveveveveveeeveeeer,r,r,r,r,rr,,, CCCCCC CCCCCCananaananananaanannannnnadadadaddadaddadaddaaaaaaaaaaaaaa aaaaaaaaaaaaa
Vancouver, Canada
LEGAL COUNSEL
LELLELELLELEELELLEEEEEEEEEGAGAGAGAGAAGAGAGAGAGAGGGGG LLL LLL L COCOCOCOCOOCOCOUNUNUNUNUNUNUUNNNNNNNUNNUUNSESESSSESESESEEEEEESS LLLL LLLL LL
FaFaFFaFFaFaFaFaFFaskskskskskskskskeneneneneneeen M M MMM M MMararararararaarttittiiiitititititiiiinennenenenenennenenenneeeneenn auauauauauauaaaaaa D DD D DD DuMuMuMuMuMuMMoououoououououououooouououlilililiilin n n n LLLLLLLLLLLLLLLLLLLLLLLLLLLP PPPPP P PPPP
Fasken Martineau DuMoulin LLP
ToToToToToTooTooooooooooToororororororororororrr ntntntntntntntttntttttnto,o,o,o,oo,oooo,o,oo,o,o,oo,oo, OO OOOO O ntntntntntttntttttttaraaararrararararararaaaa ioioioiooiooioioiioooooooiooo
Toronto, Ontario
REGISTRAR AND TRANSFER AGENT
RERERERERERREERREREER GIGIGIGIGIGIGIGIGIGIIISTSTSTSTTSTSTTTTTSTSTTSTTTSTTRARARARARRAAAARARAARARARARRRARRR R RRRRR ANANANNNANANNANANANNAAANDD D D D DDDDD TRTRTRTRTRTRTRTTTTRRANANANANANANANANNANANANNNNNNNNNNNSFFSFSFSFSFFSFSSFSSFSSFSFSFSSSSSSS ERERERERERERERRERERERRRERREEREEREREEEEERREERRE AA A AA A AAAAAAGEGEGGEGEGEGEGGEGEGGEGEGGENNNTNTNTNTNTNTNTNTNNNTNNN
CCoCooCoCoCoCooCompmpmpmpmpmpmpmpmpmpmmpmmpmppmmmmppputuutttutututuu erererererrreeershshshshshshsshshhshs aararararaaraaraaa eeeeee e eeee T TTTTTTTTTT TTTrururuuuuuuuruuururuuuuurr stststststststststttsttttststttstststtsttststtstst CCC CCCC CCC CCCCCCCCCCCCCCCCCComomomomomommommoomomomommommmmmmmmmmmmmpppapapapapapapapapapappppapaapapaanynynynynynynynynynynny o o oooo oooooooooooooooof ffff fffffff ffffffffff CaCaCaCaCaCaCaCaCaCaCaCaaaaaaaaaCaannnannnnanananaanananannaannnann dadadadadaddadad
Computershare Trust Company of Canada
ToToToToToToToToTooooooTTooooorororororooorooooroontntnnnntntntntntntnntn o,o,o,o,ooo,o, OO OOOO O ntntntntntntntnntnttnnntnnnnnntnn araaraaraararara ioioiiiooioioioooooooooooioooooooo
Toronto, Ontario
STSTSTSTSTSTTTTTSTOCOCOCOCOCOCOCOCCOCCOCOCCCOCOCCOOCCCOCKKK KKKKKK KKKK KK EXEXEXEEXEXXXEXEEXEEXXEXXXXXXXXXXXXCHCHCHCHCHCHCCHCHCCHHHCCHCHCCHHCCCC ANANAANANANANAANAAAAANAANANANNAANANNNGEGEGEGGGEGEGGEGEGEGEGGGEGGGGGGGEGGEE L LL LL LLLLLLISISISISSISSSSSISSSTITTITTITITITTTT NGNGNGNGNGNGNNNGNGNNGNNNNNGGGGNNGGNG
STOCK EXCHANGE LISTING
TTSTSTSTSTSTSTTSTSTSTSTTTTTST XXXX X XX X XXXXXXXXXXXXX VeVeVeVVeVeVeVeVeVeVeVeVVVeVeVVVVeVVeVV nntnntnntntnttntntntntnttnntttntturuurururuurrururuuu e ee eeeeee eeee ExExExExExEExxEExxEExchchchchchhhchhchchhananananananananananngegegegegegegeeg
TSX Venture Exchange
TrTTTrTTrTrTrTTrrTrTrrrTTrT adadadaddadadadadaddadddddddada ininnninninininnninininnninniniiniiiiinni gggggggggggggggg ggggg gggggggggg gggggg gg ggg SySySySySySSySySySySySyyySySyySyySySySSSSSSymbmbmbmbmbmbmbmbmmbmbmbmbmbmmmbmbbbmbbbmbbbbbmmbbolololollolololooloo ::: :::: TSTSTSTSTSTSTSTSSSSTSTSTSTTTTSTST D DDD D DDD D DDDDDDDDD
Trading Symbol: TSD
33333333333333333333
33
tstststststsssstststststtststsodododododododdoodoodililililoooo rerererererrreresosososososourururuuuuururccecececececes ss s s s lilililillililil mimimimimimmmm teteteteteteeeeeddddddddddddddddd
tsodilo resources limited