Tsodilo Resources Limited Annual Report 2021 Table of Contents
Management's Discussion and Analysis - P.1
Consolidated Financial Statements - P.21
Financial Reporting Responsibility of Management - P.22
Independentent Auditor's Report - P.23
Information for Investors - IBC
TSODILO RESOURCES LIMITED
Management’s Discussion and Analysis
FOR THE YEAR ENDED
DECEMBER 31, 2021
The Management’s Discussion and Analysis has been authorized for
release by the Company’s Board of Directors on May 31, 2022
1 Management’s Discussion and Analysis
This management’s discussion and analysis (“MD&A”) should be read in conjunction with the consolidated financial
statements of the Company and the notes thereto for the years ended December 31, 2021 and 2020. The Company’s
consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS).
The Company’s functional and reporting currency is United States dollars and all amounts stated are in United States
dollar unless otherwise noted. In addition, the Company has three Botswana operating subsidiaries, Newdico (Pty)
Ltd., Gcwihaba Resources (Pty) Ltd. and Bosoto (Pty) Ltd. which have a functional currency of the Botswana Pula. This
management’s discussion and analysis has been prepared as at May 31, 2022.
Disclosure of a scientific or technical nature in the MD&A was prepared under the supervision of Mr. Macdonald Kahari,
the Company’s Qualified Person, as that term is defined in National Instrument 43-101.
Some of the statements in this MD&A are forward-looking statements that are subject to risk factors set out in the
cautionary note contained herein. Additional information about the Company and its business activities is available on
SEDAR at www.sedar.com.
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. It is incorporated under laws of the Yukon Territory, Canada,
under the Business Corporations Act of Yukon and the address of the Company’s registered office is 161 Bay Street,
P.O. Box 508 Toronto, Ontario, Canada, M5J 2S1. The Company currently exists under the Business Corporations Act of
Yukon and its common shares are listed on the Canadian TSX Venture Stock Exchange (“TSXV”) under the symbol TSD.
Tsodilo is an exploration stage company which is engaged principally in the acquisition, exploration and development
of mineral properties in the Republics of Botswana and South Africa. The Company is considered to be in the
exploration and development stage given that none of its properties are in production and, to date, has not earned
any significant revenues. The recoverability of amounts shown for exploration and evaluation assets is dependent on
the existence of economically recoverable reserves, the renewal of exploration licenses, obtaining the necessary
permits to operate a mine, obtaining the financing to complete exploration and development, and future profitable
production.
Outstanding Share Data
As of May 31, 2022, 49,499,581 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, 2,990,750 options are
outstanding of which 2,472,000 are exercisable at exercise prices ranging from CAD $0.07 - $0.75.
Grant Date
January 1, 2022
May 21, 2021
January 1, 2021
September 21, 2020
January 2, 2020
June 6, 2019
January 2, 2019
March 26, 2018
January 2, 2018
Expiry Date
January 1, 2027
May 1, 2026
January 1, 2026
September 21, 2025
January 2, 2025
June 6, 2024
January 2, 2024
March 26, 2023
January 2, 2023
Grant Price (CAD)
$0.64
$0.75
$0.47
$0.09
$0.07
$0.17
$0 28
$0.55
$0.65
Granted Outstanding
425,000
622,000
275,000
356,250
162,500
475,000
50,000
450,000
175,000
425,000
650,000
275,000
425,000
275,000
925,000
260,000
600,000
260,000
Exercisable
106,250
459,500
206,250
356,250
162,500
475,000
50,000
450,000
175,000
As of May 31, 2022, the following warrants were outstanding:
Grant Date
January 25, 2021
February 10, 2021
Expiry Date
January 25, 2023
February 10, 2023
Grant Price (USD)
$0.55
$0.55
Granted
2,686,038
300,000
Outstanding
2,504,055
300,000
Exercisable
2,504,055
300,000
2 Principal Shareholders of the Company
To the best of the Company’s knowledge, the principal shareholders (greater than 5%) of the Company as of May 31,
2022, are as follows:
Name
Description
Shares
Owns, Controls or Directs
% of the Issued and
Outstanding Shares
Azur LLC
Investment Trust
Lucara Diamond Corporation
Diamond Mining Co.
David J. Cushing
James M. Bruchs
Investor
Chairman and CEO
4,996,065
4,476,773
4,327,579
2,888,119
10.09%
9.04%
8.74%
5.83%
Exploration Activities as at December 31, 2021
Subsidiaries
◊
◊
◊
◊
◊
The Company holds a 100% interest in its Botswana subsidiary, Gcwihaba (Pty) Limited (“Gcwihaba”) which
holds four (4) metal (base, precious, platinum group, and rare earth) prospecting licenses.
The Company holds a 100% interest in its Botswana subsidiary, Bosoto (Pty) Limited (“Bosoto”), which holds
two (2) precious stone prospecting licenses; PL369/2014 for the area which contains the BK16 kimberlite and
precious stone prospecting license PL217/2016.
The Company holds a 100% interest in Newdico (Pty) Limited. (“Newdico”), holds one (1) industrial mineral
prospecting
license PL091/2019, effective January 1, 2020. Newdico also provides administrative,
operational, exploration, geophysical and drilling services to the Company’s other subsidiaries.
The Company holds a 70% interest in its South African subsidiary, Idada Trading 361 (Pty) Limited (“Idada”).
The Company holds a 100% interest in Tsodilo Resources Bermuda Limited to which the shares of its
operating subsidiaries are registered.
1. DIAMOND PROJECTS
The Company holds two prospecting licences for precious stones, registered to Bosoto. These licenses are summarized
in Table 1.
Precious Stone Prospecting Licenses as at December 31, 2021
Table 1
Prospecting
Km²
Grant
Expiry or
Current
Expenditure1
Total Expenditure from
License
Number
369/2014
217/2016
Date
Renewal
Stage
Per Annum
Grant Date and if held to
Date
(BWP)
Full License Term
Rental
Work
BWP1
USD as at
Fee
Program
12/31/21
1.02
10/01/21
9/30/23
1st Extension
1,000
20,000,000
40,002,000
3,374,969
292
7/01/20
6/30/22
1st Renewal
1,460
500,000
1,002,920
84,617
1 Amounts include services accounted for at market value provided by Tsodilo and its subsidiaries and all expenditure amounts are
incremental in nature and qualified by positive results in the evaluation process throughout the license term.
1.1 PL369/2014 (BK 16)
Bosoto was granted prospecting license (PL) (PL369/2014) over the BK16 kimberlite pipe effective October 1, 2014.
The prospecting license was renewed for an additional two-year period commencing October 1, 2017 and a second
two-year renewal application was granted effective October 1, 2019. Bosoto received a two-year extension of the
license from the Ministry of Mineral Resources, Green Technology and Energy Security (“MMGE”) for PL369/2014
commencing October 1, 2021.
The diamondiferous BK16 kimberlite pipe is located within the Orapa Kimberlite Field (” OKF”) in Botswana and
covered by ~25 meters (m) of Kalahari Group sediments. BK16 is located 37 kilometers (km) east-southeast of the
Orapa Diamond Mine AK01, 25 km southeast of the Damtshaa Diamond Mine, and 13 km north-northeast of the
Letlhakane Diamond Mine, all operated by Debswana and 28 km east-northeast from Lucara Diamond Corporation's
Karowe Mine (AK6).
3 The OKF contains at least 83 kimberlite bodies, varying in size from insignificant dykes to the 110 hectares (ha) AK01
kimberlite pipe. Ages of emplacement are Cretaceous and range from 111 Ma for Lethlakane-DK01 (Letlhakane Mine)
to 85 Ma for Orapa-AK01, representing a protracted period of kimberlite magmatism lasting approximately 20 million
years. Of the 83 known kimberlite bodies, eleven (11), AK01, AK02, AK07 (Orapa, Debswana); AK06 (Karowe, Lucara
Diamond Corporation); BK01, BK09, BK12 and BK15 (Damtshaa, Debswana); DK01 and DK02 (Letlhakane, Debswana);
and BK11 (Firestone Diamonds) are currently being or have been mined.
In July 2016, TRBL completed a share repurchase and royalty fee agreement with Bosoto’s minority shareholders. The
minority shareholders’ 25% equity interest was purchased for a 2% gross proceeds royalty derived from the sale of
diamonds mined from Bosoto’s BK16 kimberlite project. The result of this transaction resulted in Tsodilo having a
100% interest in Bosoto and its BK16 exploration project.
Summary of Work Performed as at December 31, 2021
The diamondiferous BK16 kimberlite pipe is approximately six (6) hectares in size at surface and is known to contain
rare and valuable Type IIa diamonds. A mini-bulk sampling program was undertaken to obtain an initial determination
of the quality and value of the BK16 diamonds. This was successfully undertaken via fourteen (14) 24-inch Large
Diameter Drilling (LDD) totaling 3,121 meters. 2,077 tonnes (callipered) of kimberlite were extracted. From this
extraction, 243 individual bulk samples were processed at the Company's dense media separation (DMS) plant ahead
of X-Ray diamond separation and final hand sorting at the Company's secure recovery unit. The diamond recovery
resulted in 509 diamonds weighing 78.403 carats which were studied for value and size frequency distribution (SFD)
modelling to model the SFD of the BK16 kimberlite which showed the following:
◊
◊
◊
◊
successfully demonstrated the potential of the BK16 kimberlite to host high value diamonds between US$
281 to US$ 792 per carat, see Table 2;
successfully confirmed the presence of Type IIa diamonds where 3.8% of the diamonds were identified as
high-quality Type IIa diamonds consisting predominantly of D color stones;
a Size Frequency Distribution study (SFD) of the diamonds recovered from the LDD samples indicates that
the size distribution of BK16 could be coarser than several producers in southern Africa. There are indications
that BK16 could have a broadly similarly coarse shaped size distribution to that of the Lucara's Karowe Mine
(Botswana), Petra Diamonds' Premier Mine (South Africa), and Lucapa Diamond's Mothae Mine (Lesotho);
and,
successfully confirmed the potential of BK16 to host large special stones of +10.8 carats where size frequency
distribution analysis indicates that 2% to 5% of the total carats may be greater than 10.8 carats (specials)
(which compares favorably with Lucara Diamond Corp.'s Karowe Mine (AK6) production of specials).
This SFD modeling led to a scoping level range analysis techno-economic modelling of the deposit using some
defined variables and options for developing the project. This range analysis suggests that a positive NPV project is
possible. The range analysis suggests that at diamond values around $350/ct the target could support a well-managed
toll treatment operation. As the value increases to $500-550 it would be viable to contemplate a variety of low-capital
intensity operations. At values above $600-650/ct the strategy of a developing a stand-alone full-size operation should
be pursued. Still further alternatives involved the utilization of other processing plants in the OKF that are operating
beneath their capacity.
These encouraging results suggest that BK16 has the potential to become a mineable asset and suggest that the BK16
project employ a surface bulk sample method to augment the Phase 1 LDD sampling for its next Phase II stage of
evaluation.
Phase I SFD modelled grade, diamond value and kimberlite value.
Table 2
Variable
Unit of
Measure
BK16
Sample
Grade
cpht
Diamond Value
Kimberlite Value
US$/carat
US$/tonne
3.8
177
6.6
Current BK16 SFD Study
Min
4
281
11
P20
5
290
15
P80
7
600
38
Max
8
792
67
4 Future Plans and Outlook for BK16
The encouraging results from the Phase I program justifies moving onto Phase II which is to increase the number of
carats recovered significantly by processing a far larger sample which will lead to an increase in the certainty of the
grade and diamond value. Phase IIa will consist of the following:
Phase IIa Surface Bulk Sampling:
Extract ~20,000 metric tonnes of kimberlite to obtain 800 to 1,600 carats of diamonds;
Significantly improve the understanding of the grade of the deposit in cpht;
Solidify further the accuracy of the high diamond value in US$ per carat;
Further confirm the presence and quality of the Type IIa diamond population;
Confirm the presence of larger stones and demonstrate that BK16 will be a significant producer of special
stones above 10.8 carats and >100 carat stones;
Define an inferred resource; and,
Further refine the accuracy of the economic fundamentals of the project to move towards detailed feasibility
studies and ultimately mining.
The envisioned Phase IIa surface bulk sampling of this type constitutes standard industry practice for diamond
exploration of kimberlites like BK16 to gain enough carats for an effective economic analysis. The Phase IIa bulk sample
design will be a basic small and shallow box-cut style sample. Twenty-five (25) meters of over-burden will be stripped
to expose the kimberlite below resulting in a depth of the box-cut design of 30 - 35 meters. Engineering studies
undertaken into this surface bulk sample were comprised of a geotechnical characteristic study; a sample location
optimization study to maximize number of diamonds; and, a final optimized pit design optimization which construct a
box-cut design specification optimized pit shell that takes into account geotechnical parameters and grade and
tonnage considerations. This final design was signed off by the independent engineers. In addition, a detailed
rehabilitation plan was created that meets statutory requirements and will ensure the workings and facilities are safe
and restore the environment to as close as possible to its natural state.
If results are positive from this Phase IIa then a further phase of bulk sampling will be undertaken (Phase IIb) for a 5,000
tonnes LDD program plus another 20,000 tonnes of surface bulk sample in Phase IIb. Phase IIa and Phase IIb should
provide a total of 1,800 to 3,600 carats from and provide a solid foundation for progressing the BK16 project, where it
is envisaged that this will lead into mining of the BK16 kimberlite.
1.2 PL217/2016
PL217/2016 was acquired in the second quarter of 2017. The license has an effective date of January 1, 2017 for an
initial period of three (3) years followed by two 2-year renewals. The first renewal was granted on June 29, 2020 with a
commencement date of July 1, 2020 for a period of two-years. A renewal application was was filed in the first quarter
of 2022.
The license lies within the OKF and is situated some 10 km south of the Orapa Mining area and with the same distance
to the west of the Letlhakane Mining lease. It surrounds the Karowe Mining lease, while the BK11 prospect is directly to
the east of the licence. Other kimberlites occur along its northern and eastern borders. The licence is highly
prospective for kimberlites but also has the potential to contain secondary diamond deposits associated with the
paleo-drainage network in the area. The present drainage is to the north and erosion of the kimberlites would have
resulted in the residue, including diamonds, to have been transported in the same direction. The focus of the
exploration work would therefore be not only on finding kimberlites but also to assess the geomorphology in the
search for paleo-channels and alluvial diamond deposits.
Summary of Work Performed as at December 31, 2021
A novel mix of remote sensing strategies which involved studying in combination air magnetic surveys; Aster LT1;
Aster GED Emissivity; Landsat ETM 7+; Landsat LC08, Landsat 8 False Color, Shuttle Radar Topography Mission (SRTM)
digital elevation models (DEM); and regional digitized geology, helped identify a number of potential alluvial and
kimberlite targets for further exploration.
This initial investigation led to a program of ground magnetics surveys over these targets which were conducted in
two stages, and totaled 246 survey line km. This further refined the understanding of the area and identified 12
kimberlite targets of which 5 are high priority. Additional high-resolution ground gravity surveys followed and were
conducted along lines perpendicular to the previously identified paleo-channels and also down stream of AK6 and
BK11. Modelling of the ground magnetic and ground gravity data led to the identification of a number of paleo-
channels. Where alluvial gravel paleo-channels have characteristically lower densities, and as such can be identified as
having a lower gravity than the surrounding area. This modelling indicated significant overlaps between these ground
5 geophysical surveys and the remote sensing interpretations for the locations of subsurface paleo-channel alluvial
targets. Several prospective paleo-channel targets close to present-day drainages have been noted. Those channels
may contain alluvial diamonds sourced from AK6 (Karowe / Lucara Diamond Corp.) and BK11 (Firestone Diamonds)
and could contain large diamonds that are characteristic of AK6.
Future Work on PL217/2016
The initial exploration results for the remaining ground within this prospecting license are encouraging and require
further investigation. The next exploration program will consist of:
further high-definition ground magnetic surveys over the license to further test for other potential
diamondiferous paleo-channels;
a soil sampling program has been planned to help delineate drilling targets by identifying kimberlite
indicator areas around some of the kimberlite targets identified;
this will lead to a prioritized drill program to test the alluvial targets and the kimberlite targets; and
if successful and diamonds are identified in either the alluvial targets or the kimberlite targets this will led to
a bulk sampling programs of these prospects.
2. METALS (BASE & PRECIOUS, PLATINUM GROUP METALS, AND RARE EARTH ELEMENTS) PROJECTS
Seven (7) PL’s were initially granted effective October 1, 2018 for a period of three (3) years. Two-year renewal
applications were filed in the second quarter 2021 reducing the overall license package from 4,921 km2 to 2,462 km2
consisting of five (5) prospecting licenses. The reduction in the license area package only impaired those two (2)
licenses and did not have a material an impact of the prospectivity of the remaining project area. Four licenses were
renewed effective January 1, 2022 while the fifth remains in the renewal process. The details of the Company’s
prospecting licences are set forth in Table 3.
Table 3: Gcwihaba Metal Licenses
Prospecting
Km²
Grant
Expiry or
Current
Expenditure*
Total Expenditure from
license
Number
Date
Renewal
Stage
Per Annum
Grant Date and if held to
Date
(BWP)
Full License Term
020/2018
021/2018
022/2018
023/2018
024/2018
454
573
161
492
782
NA
NA
In Renewal
Rental
Work
BWP
USD as at
Fee
NA
Program
12/31/21
1,000,000
NA
NA
1/01/22
12/31/23
1st Renewal
2,865
1,000,000
2,005,730
84,616
1/01/22
12/31/23
1st Renewal
805
1,000,000
2,001,610
168,876
1/01/22
12/31/23
1st Renewal
2,460
1,000,000
2,004,920
169,155
1/01/22
12/31/23
1st Renewal
3,910
1,000,000
2,007,820
169,400
8,020,080
592,047
The exploration work conducted on the Gcwihaba licenses has developed over time and the following targets are
currently being explored within Neoproterozoic rocks within the licenses which are comprised of Copper Belt (Lufilian
Arc) equivalent meta-sediments (including graphitic phyllites, schists, marbles (carbonates), diamictites, and iron
formation), metabasites and gabbros (535 Ma):
1.
2.
3.
4.
Xaudum Iron Formation Deposit: Comprised of a magnetite banded iron formation deposit and iron
rich schists that are contained within the Grand Conglomerate Formation (linked to the Chuos in
Namibia);
Copper and Cobalt Exploration: Sedimentary Cu/Co (Katanga type sediments) within the entire
Neoproterozoic package;
Xaudum Gold Exploration: Gold mineralisation linked to the Xaudum Iron Formation; and
Rare Earth Element Exploration: Skarn REE and Cu targets. These are secondary targets hosted within
marbles (carbonate) rich lithologies and include significant enrichment in REE and Cu.
6 Summary of Work Performed as at December 31, 2021
Exploration for these metals is driven by geophysics as there is no outcrop and there is significant Kalahari cover
overburden of sands and calcrete. To this end, the Company has completed:
Geophysics: Over 1,800 km2 (~20,000-line km) of ground magnetics which has defined the extent of the highly
magnetic XIF. Airborne electro-magnetic survey (Spectrem) was flown (16,934-line km) collecting electromagnetic
(EM), magnetic and radiometric data. A 10,392-line km at a 500 m flight line interval airborne gravity survey also was
flown. These surveys have contributed greatly to advancing the structural and geological modelling of the area, which
have aided immensely in exploration targeting.
Drilling and Assaying: 366 core drill holes totalling 77,174 meters of core, including 116 reflex gyro surveys and over
52,000 samples were sent for assay. Additionally, a 220-hole drill program (13,689 meter) known as the Kalahari
Geochemistry Program (KGP) was conducted to the test soil overburden for hydromorphic dispersion of copper and
other metals from bedrock mineralization via assaying (8,326 samples assayed for As, Au, Bi, Co, Pb, Al, Ca, Cu, Mg, Ni,
Zn, and Ag) on a 2 km grid to locate targets for further exploration and drilling. This program identified a number or
high priority targets for further exploration.
Xaudum Iron Formation: This is a potential prospect for future mining and has been identified as our key program. To
date drilling of Block 1 the northern part of the XIF deposit resulted in a geology and mineralisation model being
generated using the Gocad modelling package. This model was used by SRK Consulting (U.K.) to define Gcwihaba
maiden Mineral Resource Estimate (MRE) in a National Instrument (NI) 43-101 technical report for Block 1, via standard
pit optimisation techniques. This Block 1 resource is defined as 441 million tonnes (Mt) grading 29.4% Fe, 41.0% SiO2,
6.1% Al2O3 and 0.3% P and represents Botswana’s first and only iron resource. Davis Tube Recovery (DTR)
metallurgical test work showed that all major mineralised units are capable of producing a premium grade magnetite
concentrate product of ~67% Fe. This XIF iron concentrate product will be very similar to the iron ore concentrate fines
and pellets feed produced from premium iron ore producers in the U.S., Canada, Brazil, Sweden etc. and attract a
premium value compared to standard global iron ore products.
The reported Block 1 Mineral Resource represents only a fraction of the potential XIF mineralization delimited by the
ground magnetics. An Exploration Target for the entire strike of the XIF is estimated to be 5 to 7 billion tonnes with
grades ranging between 15-40% Fe. This XIF Exploration Target was generated using inversion modelling of the
ground magnetic signal which was compared to local drill-hole model volumes to create inversion model volume
conversion factors, these values were used to define volumes for the entire XIF which were converted to tonnes via
measured density values. It is important to note that the tonnages and grade quoted in this exploration target are
conceptual in nature, there has been insufficient exploration to define this fully as a mineral resource and that it is
uncertain if further exploration will result in the full target being delineated as a mineral resource.
A Phase II evaluation drilling program has begun within the next major XIF magnetic anomaly area, referred to as Block
2 (spilt in to Block 2a priority, and Block 2b). 755 assay results from 10 drill holes in Block 2a have been returned and
confirm that Block 2a located 10 kilometres south of Block 1 is a continuation of the same Block 1 magnetite rich units
which will result in a significant increase in the resource tonnage for the XIF project upon completion of the Block 2a
drill program. The Company is looking to expand its XIF resource into Block 2a and these assay results show that the
Company can expect a significant resource increase in this area. Assay Results for 10 holes drilled in Block 2a show the
following:
Ten (10) evaluation drill holes were drilled within the Block 2a area of the XIF totalling 2,046.40 meters;
1,197.70 meters of highly magnetic magnetite rich iron mineralization of the same type as seen in Block 1
were intersected;
Drilling results indicate that Block 2a contains the same three magnetite resource lithological units that are
seen in Block 1 with the following average grades;
o
o
o
35.6% Fe is the average Block 2a grade of the major Banded Magnetite BIF unit coded MBA
(inclusive of weathered material);
35.5% Fe was the average Block 1 grade for MBA;
25.1% Fe is the average Block 2a grade of the major Magnetite Diamictite Schist unit coded DIM
(inclusive of weathered material);
20.8% Fe was the average Block 1 grade for DIM;
25.0% Fe is the average Block 2a grade of the minor Magnetite Garnet Schist unit coded MGS
(inclusive of weathered material);
22.1% Fe was the average Block 1 grade for MGS;
7 o
o
These results confirm that the units in Block 2a are a continuation of the same magnetite rich iron
formation 10 kilometres south of Block 1;
Based on metallurgical Davis Tube Recovery (DTR) magnetic separation (P80 of 80 micron) results
for Block 1, a general average high-grade iron concentrate of 66 - 67% Fe and above can be
expected from Block 2a;
Block 2a will represent a significant increase in the XIF resource tonnages as it is of a similar size to Block 1.
The Company created a preliminary geological model based on drilling and assay results focusing on the
area around the elongate ‘C” XIF within Block 2a target. A block model using wirefarmes was created to
assess the potential tonnage and grade within the block. Drilling in Block 2 will commences in the third
quarter.
Geotechnical Test Works: Tsodilo undertook 30 geotechnical lab test works on the important formations for the
Xaudum Iron Formation project a including those that will make up the majority of the likely pit walls during mining of
the iron. These test works included 18 Unconfined Compressive Strength (UCS) tests, 8 Brazilian Tensile Strength (BTS)
tests, and 4 Direct Shear Strength (DSS) tests. The UCS and the BTS strength tests indicate that the XIF major
Geodomains are competent and strong in both dimensions of compression and tension. The UCS mode of failure
indicates that DIA, DIAW and MBW tend to show a preferred mode of failure related to the foliation. This is not as
common for MBA and CAC. The joint discontinuities tested for DSS lean towards poor and fair characterizations.
These are the first set of geotechnical lab tests conducted on the XIF and show that the XIF materials are competent
and will result in a good set of geotechnical parameters to be used in the ongoing PEA. These geotechnical lab tests
show that the XIF materials are all within standard mechanical rock property ranges and that there will be no
geotechnical issues arising from the XIF materials confirming that the XIF will show “normal” pit wall angles.
Copper and Cobalt Exploration: Tsodilo has identified within the same area exciting potential for Copper/Cobalt,
Rare Earth Elements (REE), and Gold within these same Katanga meta-sediments and associated basement complex.
Tsodilo has reviewed and refined its targets to fourteen (14) high priority Cu and Co targets for further exploration.
This work led to a soil sampling program to help define these targets further. 5,071 soil samples were collected and
sieved to 180 meshes from the sub-deflation soil zone during the dry season. The first targets soil samples were sent
for a specialized partial digestion technique which has been specially developed for sampling in covered terrains
called TerraLeach at Intertek laboratories Australia. This data was validated and further studied to remove
geomorphological controls and highlighted a significant target of interest that has be prioritized for drilling. Further
geological interpretation and modelling has been on-going and is designed to aid in delineating zones of alteration,
such as albite and Na-feldspar alteration which act as pathfinders for fluid flow zones that may help in defining areas
that may have potential for Cu mobility. This geological interpretation program has also aided in our understanding of
the geology of the area, where there have been some significant developments in our regional understanding that are
being captured and mapped.
Rare Earth Element Exploration: The Company has identified at least two significant skarn associated prospects (C26
and C27) that contain a standard suite of ordinary carbonate, silicate, and phosphate REE minerals of well-established
metallurgy that can be exploited easily. The holes in the two skarn anomalies C27 and C26 that stand out as being high
in TREO% are as follows:
1822C27_6: C27 skarn anomaly - This hole has the highest TREO recorded at 1.49% at 2m of intervals over 1%
TREO and 4m of intervals over 0.1% TREO.
1822C27_2: C26 skarn anomaly - This hole has 1m over 1% TREO but has 45m of intervals over 0.1% TREO.
1822C26_1: C26 skarn anomaly - This hole has 18m of intervals over 0.1% TREO.
1822C26_3: C26 skarn anomaly - This hole has 11m of intervals over 0.1% TREO.
The C27 skarn anomaly, which is the larger of the two skarn prospects, has been modeled to a conceptual Exploration
Target of 76 Mt to 92 Mt of skarn with grades ranging from 0.05 % to 1 % Total Rare Earth Elements Oxide (TREO). This
conceptual C27 skarn anomaly Exploration Target was generated by geologically modelling in 3 dimensions using the
drill-hole intersections of the C27 skarn anomaly allowing volumes representing the C27 skarn to be generated. These
modelled volumes were then turned into the tonnages quoted by using a likely range of densities for this skarn
material of 2.5 to 3.0 g/cm3. It is important to note that the tonnages and grade quoted in this exploration target is are
conceptual in nature, there has been insufficient exploration to define this fully as a mineral resource and that it is
uncertain if further exploration will result in the full target being delineated as a mineral resource.
8 Gold Exploration: Several gold anomalies have been seen within some of the Xaudum Iron Formation drill holes and
associated facies as described above. This gold project has thus far identified that there is potential for gold
mineralization to be associated with the XIF, where an analogy has been drawn to the Homestake gold deposit in
South Dakota, US, where phyllites acted as the source for the gold deposited in the XIF material. A detailed review of
all data collected to date assisted in identifying a number of potential gold anomalies for further study within the drill-
hole dataset; these have been used to assess the potential for generating Gold targets for further exploration within
this Xaudum Iron Formation and associated units. This led to a significant core logging and data mining program to
identify current holes that can be processed for gold assay, to date 6 holes have been identified as having potential
gold mineralization and are awaiting gold assay.
Future Plans and Outlook - Metals Projects
Xaudum Iron Formation: The fundamentals for iron ore are strong and iron ore has seen a strong drive that may
indicate the beginning of a new super cycle for the commodity, and with this as a background the Company is
currently exploring options for developing the XIF resource. To this end, the Company has commenced a Preliminary
Economic Assessment (PEA) for this project. The objective of this PEA will be to conduct an early-stage economic
analysis of the potential viability of the mineral resources and to develop a general strategy to move the project
forward, given its premium ore potential. The PEA will include detailed studies into; processing and engineering
strategies; equipment and technology requirements; transport and infrastructure requirements; identification of
potential environmental and social aspects; associated costs such as capital costs, operational costs, and life-cycle
costs; and, anticipated revenues.
The Xaudum iron ore project is a national interest project that can be exploited to produce an iron product of 67% Fe
and above. This highly attractive and valuable Fe product can also be further beneficiated to other Fe products such as
ferro-alloys, reduced iron products and steel. The potential for a small-scale start-up mine supplying magnetite to a
small-scale ferrosilicon (FeSi) plant which will sell FeSi products to the mines in Botswana and the mines in the local
SADC area is also being explored as a way of initiating mining at a small scale while a larger scale mine and
infrastructure can be explored and developed.
The Company has entered into a research collaboration endeavor with the Department of Chemical, Materials and
Metallurgical Engineering at the Botswana International University of Science and Technology (BIUST) and Morupule
Coal Mine (MCM) to undertake metallurgical studies with respect to the potential of generating a Pellet Feed and
Direct Reduced Iron (DRI) product from the Xaudum Iron Formation (XIF) utilizing its magnetite and MCM’s coal as a
reductant. Commercially, these high-grade pellets and DRI product would be used to produce steel within Botswana,
the region and internationally.
Tsodilo has also joined the Walvis Bay Corridor Group (WBCG), as there is currently a Feasibility Study commissioned by
the Namibian Ministry of Works and Transport for the part of the corridor called the Trans-Zambezi Railway Extension
Grootfontein - Rundu - Katima Mulilo. This Trans-Zambezi Railway Extension line linking Zambia and Namibia is
planned to pass through Divundu, Namibia providing access to Walvis Bay, Namibia's deep-sea port. Divundu is
located approximately 35 kilometers (22 miles) from the Companies Xaudum Iron license location in Northern
Botswana.
Copper and Cobalt Exploration: A detailed review of the data is ongoing to further refine exploration priorities
incorporating new detailed structural and geological mapping data alongside the recent soil sampling information.
This work also includes plotting of alteration data logged and assay generated on geological cross sections,
interpolation of information into a 2D map, improved structural interpretations, which will ultimately lead to updated
drill target recommendations. Remaining soil samples will be sent for TerraLeach analysis to assist in refining the high
priority Cu and Co targets so focused drilling of these targets can occur.
Rare Earth Element Exploration: The next stage for REE exploration is to develop a detailed study of the geology and
facies and alterations associated with the skarns and develop a detailed geological and mineralization model of these
skarn anomalies. This will lead to the development of a REE exploration target tonnage and grade range that will
advance the next stage of REE drilling and exploration program to further define the grade and tonnage of these REE
deposits.
Gold Exploration: The gold logging program will continue and holes identified sent for gold assay, which will lead to
drill target generation for further exploration.
9 3. Newdico (Proprietary) Limited (“Newdico”) – Botswana
The Company holds a 100% interest in Newdico (Pty) Limited (“Newdico”) which holds one (1) industrial mineral
(granite & dolerite) license. The license lies within the Central District of Botswana just to the east of the town of Nata
and has an area of 266 km2. The license is prospective for granites/granitic materials and dolerites that are industrial
minerals used mainly in the construction industry as aggregate. This granite when crushed into a granular aggregate
material of various sizes can be suitable for use either on their own or with the addition of cement, lime or a
bituminous binder in construction. Important applications include concrete, manufactured sand, mortar, road stone,
asphalt, railway ballast, drainage courses and bulk fill. This license is summarized in Table 4.
Industrial Minerals Prospecting License as at December 31, 2021
Table 4
Prospecting
Km²
Grant
Expiry or
Current
Expenditure1
Total Expenditure from
License
Number
Date
Renewal
Stage
Per Annum
Grant Date and if held
Date
(BWP)
to Full License Term
Rental
Work
BWP
USD as at
Fee
Program
12/31/2021
091/2019
566
01/01/20
12/31/22
Initial Grant
2,830
130,000
138,490
11,685
+ 1st year 30,000 BWP; 2nd year 60,000 BWP; and 3rd year 40,000 BWP
Summary of Work Performed as at December 31, 2021
A desktop study of the regional geophysical magnetic data was undertaken in the license area in order to delineate
granite and/or dolerite buried beneath the Kalahari. The local geology is characterized by basement complex
outcropping mainly in the northeast corner of the Dukwe area, which is to the east of the license area. There is some
exposure around the Matsitama river where it was mapped as a gneiss and was described as varying in texture “from
fine-grained and granulitic – or schistose – to medium or coarse-grained and granitic” falling into two broad
lithological types; the feldspathic schists and amphibolitic schist. Overlaying the complex is a succession of Dukwe
formations which is the lowest part of the Karoo Supergroup. It comprises of sedimentary rocks which from the lower
part, including beds of sandstone. The upper member is a sequence of varved shales within a thin bed gritty pellet
conglomerate. Overlying the Dukwe formation are successions of the Mosu and Ntane sandstones. Capping the Ntane
sandstones are the Karoo flood basalts, and these can be inferred from the magnetic structures within the license area.
The Total Magnetic data was reduced to the pole, from which various filters were applied to obtain the first and second
derivatives, Analytical Signal and Tilt derivative maps were utilized enabling an interpretation to be performed.
Magnetic “granitic textures” were visible from these maps and inferred granite was outlined. Further review of the data
will take place before field work commences.
4. Idada Trading 361 (Pty) Limited (“Idada”) – Barberton Gold Project, South Africa
The Company holds a 70% interest in its South African subsidiary, Idada. Idada made application for an exploration
license (Ref: MP30/5/1/1/2/1047PR) in the Barberton area in February 2012. During the second quarter 2015, notice
was received from the Department of Mineral Resources, South Africa which granted the Company the prospecting
rights for gold and silver in the applied for area subject to certain subsequent conditions being met. The Company has
fulfilled those requirements and the Prospecting Right, together with the EMP, was executed and became effective on
April 7, 2016. The Prospecting Right was been granted for a term of five years effective as of May 2015.
Notices were sent to all surface owners of the five farms informing the owners of our intent to access the property to
commence exploration activities. Three landowners, holding most of the target ground, have denied access. This issue
has been submitted to the Department of Mineral Resources (DMR) for resolution.
During the third quarter 2019, the Company was informed that certain portions of our license areas were designated
as a World Heritage site by UNESCO. UNESCO has informed the Company that in accordance with the Operational
Guidelines for the Implementation of the World Heritage Convention, UNESCO is investigating the situation that the
Company brought to their attention. UNESCO has informed the Company that according to IUCN, the Advisory Body
to the intergovernmental World Heritage Committee concerning nominations of natural heritage sites on the World
Heritage List, the overlapping prospecting license on the western portion of the property or of the presence of Tsodilo
Resources Ltd was not brought to the attention of IUCN during the evaluation process. The documentation related to
10 the evaluation and
http://whc.unesco.org/en/list/1575/documents.
inscription of
the site on
the World Heritage List
from UNESCO’s website at:
As the responsibility for nominating sites to the World Heritage List and the management and protection of the World
Heritage properties inscribed is under the authority of the State Party of South Africa, UNESCO advised the Company
that they would be contacting the appropriate South African office for clarification. To date, it is the Company’s
understanding that neither the Department of Mineral Affairs (DMA) nor the Department of Environmental Affairs
(DEA) has responded to UNESCO’s inquiry. In addition to UNESCO’s inquiries, the Company also contacted the DMA
for guidance and received a response, but before the issue could be dealt with the South African government was shut
down due to the COVID-19 virus. In the interim, the Company has filed a renewal application to protect our license
rights.
In the fourth quarter of 2021, the Company determined to stop all efforts to protect its licenses rights as all efforts to
contact its Black Empowerment Partner and the DMA and DEA have failed as all parties are not responsive. The
Company has written off this minor investment of $7,650 as impaired as at the year ended December 31, 2021.
Exploration and evaluation additions for the year-ended December 31, 2021 are summarized as follows:
Bosoto Botswana
Project
BK 16
Precious
Stones
Project
PL 217
Precious
Stones
Bosoto
Total
Drilling Expenditures
$ 5,175
$ 64
$ 5,239
Amortization Drill Rigs, Vehicles & Trucks
GIS & Geophysics
Lab Analyses & Assays
License Fees
Office, Maintenance, & Consumables
Salaries, Wages & Services
4,479
2,898
--
89
12,644
55,604
--
2,898
--
65
6,672
38,037
4,479
5,796
--
154
19,316
93,641
Newdico
Botswana
Project
PL091
Industrial
Minerals
$ 265
54,979
2,898
--
119
6,239
50,879
Idada
S. Africa
Precious
Metals
Gcwihaba
Botswana
Metals
TOTAL
$ 10,676
$16,180
5,442
2,898
1,832
1,647
13,854
52,130
64,901
11,592
1,832
1,920
39,409
196,650
$ --
--
--
--
--
--
--
Balance at December 31, 2021
$80,889
$47,738
$128,625
$115,380
$ --
$88,479 $332,484
Exploration and evaluation additions for the year-ended December 31, 2020 are summarized as follows:
Idada
S. Africa
Bosoto
Botswana
Newdico
Botswana
Project
BK 16
Precious
Stones
Project
PL 217
Precious
Stones
Bosoto
Total
Drilling Expenditures
$ 1,558
$ 749
$ 2,307
Amortization Drill Rigs, Vehicles & Trucks
GIS & Geophysics
Lab Analyses & Assays
License Fees
Office, Maintenance, & Consumables
Salaries, Wages & Services
--
--
31,753
87
20,015
71,761
--
--
--
--
5,046
19,120
--
--
31,753
87
25,061
90,881
Project
PL091
Industrial
Minerals
$ 5,608
56,932
--
--
--
16,817
54,518
Gcwihaba
Botswana
Metals
Precious
Metals
TOTAL
$ 11,019
$18,934
--
--
--
2,138
12,246
36,107
56,932
--
31,753
2,225
54,124
181,506
$ --
--
--
--
--
--
--
Balance at December 31, 2020
$125,174
$24,915
$150,089
$133,875
$ --
$61,510 $345,474
11 LIQUIDITY AND CAPITAL RESOURCES
As at December 31, 2021, the Company had a negative working capital of ($1,791,640) [2020: ($1,811,417)], which
included cash of $4,713 (2020: $5,620). 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 notes payable at December 31, 2021 are summarized as follows:
Date
Balance
December 31, 2020
Changes
in 2021
Balance
December 31, 2021
Interest
Rate
Termination
Fee
Maturity
Date
1-Oct-18
31-Dec-18
31-Jan-19
30-June-19
30-Sept-19
31-Dec-19
01-Oct-20
21-Jun-21
27-July-21
28-Aug-21
27-Sept-21
31-Dec-21
$ 5,819
($ 5,819)
347,579
85,000
293,687
36,462
95,146
192,042
(74,573)
(85,000)
(86,445)
(36,462)
(37,462)
--
26,500
26,500
27,000
25,500
102,235
Total
$1,055,735
($118,026)
$ --
273,006
--
207,242
--
57,684
192,042
26,500
26,500
27,000
25,500
102,235
$937,709
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
$ --
--
27,300
30-Dec-22
--
--
NIL
On Demand
--
NIL
NIL
NIL
NIL
NIL
NIL
NIL
--
On Demand
On Demand
On Demand
On Demand
On Demand
On Demand
On Demand
$27,300
*During the year-ended December 31, 2021, $273,006 of notes payable had its maturity extended from
December 31, 2021 to December 31, 2022.
On January 5, 2021 $295,616 were retired vis-à-vis private placement participation.
On February 10, 2021 $19,800 in promissory notes were paid in cash.
On February 11, 2021 $10,345 in promissory notes were paid in cash.
On June 21, 2021 a promissory note was issued for $26,500 to an employee, who is a director of the
Company. The note is payable on demand and has an annual interest rate of 8%.
On July 27, 2021, a promissory note was issued for $26,500 to an employee, who is a director of the
Company. The note is payable on demand and has an annual interest rate of 8%.
On August 28, 2021, a promissory note was issued for $27,000 to an employee, who is a director of the
Company. The note is payable on demand and has an annual interest rate of 8%.
On September 27, 2021, a promissory note was issued for $25,500 to an employee, who is a director of
the Company. The note is payable on demand and has an annual interest rate of 8%.
On December 31, 2021, a promissory note was issued for $102,235 to an employee, who is a director of
the Company. The note is payable on demand and has an annual interest rate of 8%.
The notes payable at December 31, 2020 are summarized as follows:
Date
Balance
January 1, 2020
Changes
in 2020
Balance
December 31, 2020
01-Oct-18
31-Dec-18
31-Jan-19
30-Jun-19
30-Sep-19
31-Dec-19
01-Oct-20
Total
$20,000
444,343
85,000
293,687
98,146
95,146
$1,036,322
($14,181)
(96,764)
--
(61,684)
192,042
$19,413
$5,819
347,579
85,000
293,687
36,462
95,146
192,042
$1,055,735
Interest
Rate
8%
8%
8%
8%
8%
8%
8%
Termination
Fee
$2,000
44,434
8,500
8,646
3,646
3,746
$70,972
Maturity
Date
30-Sep-20
31-Dec-20*
31-Jan-21
31-Dec-20
31-Dec-20
31-Dec-20
30-June-21
12 *During the year-ended December 31, 2021, $273,005 of notes payable had its maturity extended from
December 31, 2020 to December 31, 2021.
On October 1, 2020, a promissory note was issued for $192,042 to an employee, who is a director of the
Company. The notes are payable on demand and have an annual interest rate of 8%. This note was extended
again to 2022.
On July 24, 2020, $61,684 in promissory notes were paid and retired to an employee and director of the
Company.
On December 31, 2020, $110,945 in promissory notes were retired.
Financial Instruments
The carrying amounts reflected in the consolidated Statement of Financial Position for cash, accounts receivable,
accounts payable, accrued liabilities and loan notes payable approximate their fair values due to the maturities of
these instruments. Certain of the Company’s warrants are classified as derivative liabilities and are recorded at their
estimated fair value. There are no warrants outstanding in any of the reporting periods. 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 working capital adjustment increased to an outlay of ($1,030,572)
from the year-ended December 31, 2021 from an outlay of ($634,794) for the year-ended December 31, 2020. Overall
operating expenses increased for the year-ended December 31, 2021 in total expenses by a $593,130 compared to
2020. Several large operating expense increases for 2021 were in corporate renumeration for $119,466, investor
relations $159,760 and stock-based compensation expense $243,960 compared to 2020. The largest impact on
Comprehensive loss for the year was foreign exchange translation loss of $586,801 in 2021 compared to a loss of
$171,480 in 2020.
Remainder of Page Intentionally left blank
13 Annual Information
(in US Dollars)
Fiscal Year
December 31
2021
Fiscal Year
December 31
2020
Fiscal Year
December 31
2019
Net income (loss) for the year
Basic loss per share
Basic diluted loss per share
Total other comprehensive income (loss)
Total comprehensive income (loss) for the year
Basic comprehensive loss per share
Diluted comprehensive loss per share
Total assets
Total long-term liabilities
Cash dividend
Quarterly Information
(in US Dollar)
Fiscal Period ended December 31, 2019
Net income (loss) for the period
Basic income (loss) per share
Diluted basic income (loss) per share
Comprehensive income (loss) for the period
Basic comprehensive income (loss) for the period
Diluted comprehensive income (loss) per share
Total assets
Total long-term liabilities
Quarterly Information
(in US Dollar)
Fiscal Period ended December 31, 2020
Net income (loss) for the period
Basic income (loss) per share
Diluted basic income (loss) per share
Comprehensive income (loss) for the period
Basic comprehensive income (loss) for the period
Diluted comprehensive income (loss) per share
Total assets
Total long-term liabilities
Quarterly Information
(in US Dollars)
Fiscal Period ended December 31, 2021
Net income (loss) for the period
Basic income (loss) per share
Diluted basic income (loss) per share
Comprehensive income (loss) for the period
Basic comprehensive income (loss) for the period
Diluted comprehensive income (loss) per share
Total assets
Total long-term liabilities
($1,316,206)
($0.03)
($0.03)
(586,801)
($1,903,007)
($0.04)
($0.04)
$7,066,474
($17,055)
--
($654,974)
($0.01)
($0.01)
(171,480)
($826,404)
($0.02)
($0.02)
$7,377,506
$--
--
($297,611)
($0.01)
($0.01)
115,543
($182,068)
($0.00)
($0.00)
$7,742,854
$--
--
Quarter 1
Quarter 2
Quarter 3 Quarter 4
($64,605)
($0.00)
($0.00)
$35,244
($0.00)
($0.00)
$7,370,351
$549,343
($65,588)
($0.00)
($0.00)
(51,766)
($0.00)
($0.00)
$7,530,085
$624,107
$66,043
($0.00)
($0.00)
(246,799)
($0.01)
($0.01)
$7,370,436
$613,337
($233,461)
($0.01)
($0.01)
81,253
($0.00)
$0.00
$7,742,854
--
Quarter 1
Quarter 2 Quarter 3 Quarter 4
($89,776)
($0.00)
($0.00)
($1,209,629)
($0.03)
($0.03)
$6,637,478
--
($124,636)
($0.00)
($0.00)
($145,209)
($0.00)
($0.00)
$6,693,750
--
$320,401
$0.01
$0.01
$452,654
$0.01
$0.01
$6,982,140
--
($760,913)
($0.02)
($0.02)
$75,780
$0.00
$0.00
$7,377,506
--
Quarter 1
Quarter 2
Quarter 3 Quarter 4
($56,792)
($0.00)
($0.00)
($589,817)
($0.01)
($0.01)
$7,431,730
$--
($463,100)
($0.01)
($0.01)
$14,660
$0.00
$0.00
$7,621,126
$--
($281,075)
($0.01)
($0.01)
($724,917)
($0.02)
($0.02)
$7,162,146
$--
($515,239)
($0.01)
($0.01)
($602,933)
($0.01)
($0.01)
$7,066,474
$17,055
14 Investing Activities
Cash flow applied in investing activities increased to $286,416 for the year-ended December 31, 2021 [2020:
($209,418)].
Total expenditures of $267,583 on exploration properties for the year-ended December 31, 2021 were attributable to
the Gcwihaba, Newdico and Bosoto projects in northwest Botswana. There were limited expenses or funding of the
exploration projects in these years as the Covid-19 pandemic reduced operation activities.
Financing Activities
The Company finances its corporate and exploration activities through the issuance of equity units by way of non-
brokered private placements. Each unit has consisted of one common share of the Company and one 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. See note 3 for a description of royalty interests sold
in 2020 which provided $500,000 in cash that was used in further exploration and evaluation. No private placements
took place in 2019.
In the first quarter of 2021, the Company raised USD $1,151,821 (C$1,465,702) net of issuance costs by selling equity
capital in the form of units. Each unit was priced at C$0.50 and includes one common share and one warrant entitling
the holder thereof to purchase one Common Share for a period of 24 months from the date of issuance at an exercise
price of USD $0.55. On July 12, 2021 options were exercised for $34,136 (C$42,500). On September 30, 2021 warrants
were exercised in USD $0.55 per share for $79,090. On December 31, 2021 warrants were exercised in USD $0.55 per
share for 21,007. On December 31, 2021 options were exercised for $45,680 (C$58,375).
In the third quarter of 2017, the Company reached an agreement with Sandstorm Gold Ltd. ("Sandstorm") (NYSE MKT:
SAND, TSX: SSL) to grant royalties on three projects in consideration of the payment of $1,500,000.
The package of assets in the Royalty Sale includes:
1.
2.
3.
the grant of a 1% NSR on the Company's wholly owned Botswana subsidiary Gcwihaba Resources (Pty) Ltd.
prospecting metal licenses in northwest Botswana;
the grant of a 1% GPR on the Company's Botswana wholly owned subsidiary Bosoto (Pty) Ltd. precious stone
prospecting license (PL217/2016) located in the Orapa Kimberlite Field; and,
the grant of a 1% NSR on the Company's 70% owned South African subsidiary Idada 361 (Pty) Ltd. gold and
silver prospecting license located in the Barberton Greenstone Belt in the Mpumalanga province of South
Africa.
Sandstorm shall have a right of first refusal with respect to any third-party bona fide offers to purchase a metal or
precious stone royalty on the properties.
On July 23, 2020, the Company reached an agreement with TBM (Pty) Ltd. ("TBM") to grant royalties on its Botswana
subsidiary Gcwihaba (Pty) Ltd. ("Gcwihaba") seven (7) metal licenses (base and precious minerals, platinum group
metals and rare-earth elements) projects in consideration of the payment of $500,000 USD.
On January 25, 2021, the Company closed the first tranche of a private placement financing (the "Financing") for gross
proceeds to the Company of C$1,343,019. Pursuant to the Financing, the Company issued 2,686,038 units of securities of
the Company (the "Units") at a subscription price of C$0.50 per Unit. Each Unit is comprised of one common share in the
capital of the Company ("Common Share") and one common share purchase warrant ("Warrant"). Each Warrant entitles
the holder thereof to purchase one Common Share for a period of 24 months from the date of issuance at an exercise
price of USD$0.55.
On February 10, 2021, the Company closed the second and final tranche of the Financing for gross proceeds to the
Company of C$150,000. Pursuant to the Financing, the Company issued 300,000 units of securities of the Company at a
subscription price of C$0.50 per Unit. Each Unit is comprised of one common share in the capital of the Company
("Common Share") and one common share purchase warrant. Each Warrant entitles the holder thereof to purchase one
Common Share for a period of 24 months from the date of issuance at an exercise price of USD$0.55.
Tsodilo expects to raise the amounts required to fund the Newdico, Gcwihaba, Bosoto and Idada projects and
corporate general and administration expenses, by way of non-brokered private placements and joint ventures.
On March 4, 2021, the Company’s stock began trading on the US OTCQB Venture Market under the symbol "TSDRF".
15 RESULTS OF OPERATIONS
On a consolidated basis, the Company recorded a comprehensive net loss of $1,903,007 for the year-ended December
31, 2021 – ($0.03) per common share, compared to a comprehensive net loss of $826,404 for the year-ended
December 31, 2020 ($0.02) per common share.
Total capitalized exploration expenditures including amortization of property, plant and equipment used in
exploration activities on all projects amounted to net $6,813,782 as at December 31, 2021 compared to $7,063,327 as
at December 31, 2020. Total capitalized exploration expenditures incurred on the Newdico project as at December 31,
2021 was $239,705 compared to $141,691 as at December 31, 2020. Additions of $115,380 in 2021 were offset by
exchange translations in 2021. Total capitalized exploration expenditures incurred on Gcwihaba’s projects as at
December 31, 2021 were $2,369,157 compared to $2,482,154 as at December 31, 2020. Additions of $88,479 in 2021
were offset by impairment reduction of $1,623 and exchange translations in 2021. Total capitalized exploration
expenditures incurred on Bosoto’s projects as at December 31, 2021 were $4,204,920 compared to $4,431,690 as at
December 31, 2020. Additions of $128,625 in 2021 were offset by exchange translations in 2021. Total capitalized
exploration expenditures incurred on the Idada’s project as at December 31, 2021 was $NIL compared to $7,792 as at
December 31, 2020 This property was impaired in full. A table is presented in the Exploration and Evaluation Additions
section above with specific details.
PERSONNEL
At December 31, 2021, the Company and its subsidiaries employed fifteen (15) compared to ten (10) at December 31,
2020, including senior officers, administrative and operations personnel including those on a short-term service basis.
YEAR-ENDED DECEMBER 31, 2021
The year-ended December 31, 2021 was conservative with an operating period challenged by the COVID-19
restrictions and uncertainty. Operating expenses were at normal levels for the period. See COVID-19 discussions below.
RISKS AND UNCERTAINTIES
Operations of the Company are speculative due to the high-risk nature of its business which includes acquisition,
financing, exploration and development of diamond and metal properties (collectively “mineral”). Material risk factors
and uncertainties, which should be taken into account in assessing the Company's activities, include, but are not
necessarily limited to, those set below. Any one or more of these risks and others could have a material adverse effect
on the Company.
COVID-19 Global pandemic and Geopolitical risks
Measures and guidelines implemented by the Government of Botswana in late March 2020 which allowed the
Company’s exploration and evaluation activities to remain operational albeit limited throughout the pandemic
restrictions have gradually been rolled back as vaccination levels within Botswana have increased. Most of the
Company’s workforce (+99%) have been vaccinated. Although significant progress has been made in this area, the
Company continues to operate under its approved crisis management plan, designed to protect the health and well-
being of our employees in Botswana and elsewhere as well as the financial well-being of the business. The Company
has continued with regular health screening, temperature checks and the use of infrared measurements to prevent the
spread of COVID-19. Although many countries around the world have removed the public health measures
implemented to reduce the spread of COVID-19, uncertainty remains. It is possible that Tsodilo’s operations could be
impacted in a number of ways including, but not limited to: a suspension of exploration and evaluation activities,
disruptions to supply chains and worker absenteeism due to illness. While the impact of COVID-19 is expected to be
temporary, the current circumstances remain dynamic and the impacts on our financial position or operations cannot
be reasonably estimated at this time.
In February 2022, Russia commenced a military invasion of Ukraine. In response, many jurisdictions have imposed strict
economic sanctions against Russia and its interests. While the Company does not have any operations in Ukraine or
Russia, its business may be impacted as the conflict and economic sanctions may give rise to indirect impacts,
including but not limited to, increased fuel prices, supply chain challenges and disruptions, logistics and transport
disruptions and heightened cybersecurity disruptions and threats. Increased fuel prices and ongoing volatility of such
prices may have adverse impacts on the Company’s costs of doing business. The implications could result in a global
economic downturn that could adversely affect the Company’s business. The continuance or escalation of the military
conflict between Russia and Ukraine and the corresponding economic sanctions imposed on Russia, may also result in
increased volatility in the market for the Company’s securities and could have other effects which are currently
unknown. The Company cannot accurately predict the impact that ongoing conflict in Ukraine will have on its financial
position or operations. Uncertainty about judgments, estimates and assumptions made by management during the
16
preparation of the Company’s consolidated financial statements related to potential impacts of the COVID-19
pandemic and the Ukraine-Russia conflict on revenue, expenses, assets, liabilities, and note disclosures could result in a
material adjustment to the carrying value of the asset or liability affected.
Covid-19 Pandemic Relief
In the first Quarter of 2020, the Company initiated efforts to get Covid-19 relief from expenditure and work
requirements on our prospecting licenses due to the exceptional and debilitating global effects of the Covid-19
pandemic. In June 2020, the Ministry of Mineral Resources, Green Technology and Energy Security informed those
holding prospecting licenses that they would entertain granting relief from work and expenditure requirements on a
case-by-case basis. Applications for relief were filed for the Gcwihaba and Bosoto licenses and on January 8, 2021 the
Ministry in accordance with Section 22 of the Mines and Minerals Act, approved the cancellation of one (1) year of
prospecting programme of Bosoto Prospecting License Nos. PL 369/2014 and PL 217/2016 and Gcwihaba Prospecting
Licenses Nos. PL 020 - 026/2018 with effect from April 1, 2020.
Additional Funding Requirements
Further development and exploration of the various mineral projects in which the Company holds an interest depends
upon the Company's ability to obtain financing through equity or debt financing, joint ventures or other means. While
the Company has been successful in the past in obtaining financing through the sale of equity securities and royalty
transactions, there can be no assurance that the Company will be successful in obtaining additional financing in the
amount and at the time required and, if available, that it can be obtained on terms satisfactory to the Company.
These consolidated financial statements have been prepared on the basis of accounting principles applicable to a
going concern, which assumes that the Company will realize its assets and discharge its liabilities in the normal course
of business. The Company incurred a loss of $1,316,206 and comprehensive loss of $1,903,007 during the year ended
December 31, 2021 and as of that date, the Company had an accumulated deficit of $51,150,566 and negative
working capital of ($1,791,640). Management has carried out an assessment of the going concern assumption and has
concluded that the cash position of the Company is not sufficient to finance exploration and resource evaluation at the
projected levels, and to finance continued operations for the 12-month period subsequent to December 31, 2021. The
continuity of the Company’s operations is dependent on raising future financing for working capital, the continued
exploration and development of its properties and for acquisition and development costs of new projects.
Management believes that it will be able to secure the necessary financing through a combination of the issuance 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 the Company will be successful in these
actions. There can be no assurance that adequate financing will be available, or available under terms favorable to the
Company.
Should it be determined that the Company is no longer a going concern, adjustments, which could be significant,
would be required to the carrying value of assets and liabilities. These consolidated financial statements do not reflect
the adjustments to the carrying value of assets and liabilities, or the impact on the consolidated statement of
operation and comprehensive income (loss), and consolidated statement of financial position classifications that
would be necessary were the going concern assumption not appropriate.
Failure to obtain equity or debt financing on a timely basis may cause the Company to postpone its exploration and
development plans or forfeit rights in some of its projects.
Uncertainties Related to Mineral Resource Estimates
There is a degree of uncertainty attributable to the calculation of mineral resources and corresponding grades being
mined or dedicated to future production. Until resources are actually mined and processed, the quantity of resources
and grades must be considered as estimates only. In addition, the quantity and value of reserves or resources may
vary, depending on mineral prices. Any material changes in the quantity of resources, grades or stripping ratio may
affect the economic viability of the Company's properties. In addition, there is no assurance that recoveries in small-
scale laboratory tests will be duplicated in larger-scale tests under on-site conditions, or during production.
Determining the economic viability of a mineral project is complicated and involves a number of variables.
Commodity Prices and Marketability
The mining industry, in general, is intensely competitive and there is no assurance that, even if commercial quantities
of minerals are discovered, a profitable market will exist for the sale of minerals produced. Factors beyond the control
17 of the Company may affect the marketability of any minerals produced and which cannot be accurately predicted,
such as market fluctuations, and such other factors as government regulations, including regulations relating to
royalties, allowable production, importing and exporting of minerals and environmental protection, any combination
of which factors may result in the Company not receiving an adequate return on investment capital. Prices received for
minerals produced and sold are also affected by numerous factors beyond the Company's control such as international
economic and political trends, global or regional consumption and demand and supply patterns. There is no assurance
that the sale price of minerals produced from any deposit will be such that they can be mined at a profit.
Currency Risk
The Company's business is mainly transacted in Botswana Pula and U.S. dollar currencies. As a consequence,
fluctuations in exchange rates may have a significant effect on the cash flows and operating results of the Company in
either a positive or negative direction.
Foreign Operations Risk
The Company's current significant projects are located in Botswana. This exposes the Company to risks that may not
otherwise be experienced if its operations were domestic. The risks include, but are not limited to, environmental
protection, land use, water use, health safety, labor, restrictions on production, price controls, currency remittance, and
maintenance of mineral tenure and expropriation of property. There is no assurance that future changes in taxes or
such regulation in the various jurisdictions in which the Company operates will not adversely affect the Company's
operations. Although the operating environments in Botswana are considered favorable compared to those in other
developing countries, there are still political risks. These risks include, but are not limited to terrorism, hostage taking,
military repression, expropriation, extreme fluctuations in currency exchange rates, high rates of inflation and labor
unrest. Changes in mining or investment policies or shifts in political attitudes may also adversely affect the
Company's business.
Mineral Exploration and Development
The business of exploring for minerals and mining is highly speculative in nature and involves significant financial and
other risks which even careful evaluation, experience and knowledge may not eliminate. There is no certainty that
expenditures made or to be made by the Company in exploring and developing mineral properties in which it has an
interest will result in the discovery of commercially mineable deposits. Most exploration projects do not result in the
discovery of commercially mineable deposit. While discovery of a mineral deposit may result in substantial rewards,
few properties which are explored are ultimately developed into producing mines. Major expenses may be required to
establish reserves by drilling and to construct mining and processing facilities at a site. There can be no guarantee that
exploration programs carried out by the Company will result in the development of profitable mining operations.
Title Matters
Any changes in the laws of Botswana and South Africa relating to mining could have a material adverse effect to the
rights and title to the interests held in those countries by the Company. No assurance can be given that applicable
governments will not revoke or significantly alter the conditions of applicable exploration and mining authorizations
nor that such exploration and mining authorizations will not be challenged or impugned by third parties.
Infrastructure
Exploration, development, mining and processing activities depend on the availability of adequate infrastructure.
Reliable roads, bridges, sewer and water supply are important determinants which affect capital and operating costs.
Unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance of
provision of such infrastructure could adversely affect activities and profitability of the Company.
Uninsured Risks
The mining business is subject to a number of risks and hazards including, but not limited to, environmental hazards,
industrial accidents, labor disputes, encountering unusual or unexpected geologic formations or other geological or
grade problems, encountering unanticipated ground or water conditions, cave~ ins, pit wall failures, flooding, rock
bursts, periodic interruptions due to inclement or hazardous weather conditions and other acts of God. Such risks
could result in damage to mineral properties or facilities, personal injury or death, environmental damage, delays in
exploration, development or mining, monetary losses and possible legal liability. The Company maintains insurance
against certain risks that are associated with its business in amounts that it believes to be reasonable at the current
stage of operations. There can be no assurance that such insurance will continue to be available at economically
acceptable premiums or will be adequate to cover any future claim.
18 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.
New Standards, Amendments and Interpretations Adopted
There are no other standards which the Company would have been required to adopt in the period.
New Standards, Amendments and Interpretations Not Yet Effective
Certain pronouncements were issued by the ISAB or the IFRS Interpretive Committee that are mandatory for accounting
periods beginning January 1, 2022 or later periods. These standards are not expected to have a material impact on the
Company.
Classification of Liabilities as Current or Non-current (Amendment to IAS 1)
The amendment to IAS 1 provide a more general approach to the classification of liabilities based on the contractual
agreements in place at the reporting date. These amendments are effective for the reporting dates beginning on or
after January 1, 2023.
RELATED PARTY TRANSACTIONS
Remuneration of Key Management Personnel of the Company
Short term employee remuneration and benefits
Stock based compensation
Total compensation attributed to key management personnel
2021
$298,000
270,792
$568,792
2020
$278,106
38,521
$316,627
During the year an individual related to the CEO provided administrative and management services to the Company
and was remunerated in 2021 in the amount of $48,000 (2020: $48,000).
During the year, individuals related to key management personnel of the company received $5,970 in stock based
compensation during the period (2020: $NIL).
Board members were issued notes in the amount of $207,736 (2020: 843,576).
As at December 31, 2021, there was a total of $121,611 (2020: $85,035) payables to related parties included within
accounts payable and accrued liabilities.
There are no other related party transactions.
OUTLOOK
Precious stones and metals exploration remain a high-risk undertaking requiring patience and persistence. Despite
difficult capital markets in the junior resource sector and the general decrease in commodity prices, the Company
remains committed to international commodity exploration through carefully managed programs.
The Company does not invest in financial instruments, nor does it do any hedging transactions.
ADDITIONAL INFORMATION
Additional information relating to Tsodilo Resources Limited is available on its website at:
www.TsodiloResources.com or through SEDAR at www.sedar.com
FORWARD-LOOKING STATEMENTS
The Annual Report, including this MD&A, contains, 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 based on the opinions, assumptions and estimates of management as of the date such statements are
made, and they are subject to a number of known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company to be materially different from any future results,
performance or achievement expressed or implied by such forward-looking statements. Such assumptions include: the
Company’s ability to obtain necessary financing; the Company’s expectations regarding the economy generally,
results of operations and the extent of future growth and performance; and assumptions that the Company’s activities
will not be adversely disrupted or impeded by development, operating or regulatory risk. The Company believes that
19 expectations reflected in this forward-looking information are reasonable but no assurance can be given that these
expectations will prove to be correct and such forward-looking information included in this MD&A should not be
unduly relied upon.
There can be no assurance that such statements will prove to be accurate, as the Company’s results and future events
could differ materially from those anticipated in this forward-looking information as a result of those factors discussed
in or referred to under the heading “Risks and Uncertainties” in the Company’s AIF, as well as changes in general
business and economic conditions, changes in interest and foreign currency rates, the supply and demand for,
deliveries of and the level and volatility of prices of rough diamonds, costs and availability of power and diesel, acts of
foreign governments and the outcome of legal proceedings, inaccurate geological and recoverability assumptions
(including with respect to the size, grade and recoverability of mineral reserves and resources) and unanticipated
operational difficulties (including failure of plant, equipment or processes to operate in accordance with specifications
or expectations, cost escalations, unavailability of materials and equipment, government action or delays in the receipt
of government approvals, industrial disturbances or other job actions, adverse weather conditions, and unanticipated
events relating to health safety and environmental matters).
Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements which speak only
as of the date the statements were made, and the Company does not assume any obligations to update or revise them
to reflect new events or circumstances, except as required by law.
“s”
James M. Bruchs
Chairman and Chief Executive Officer
“s”
Gary A. Bojes
Chief Financial Officer
20
TSODILO RESOURCES LIMITED
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
21 Financial Reporting Responsibility of Management
The annual
report and consolidated
financial
reporting and internal control. The Audit Committee
statements have been prepared by management.
is composed of three directors, all of whom qualify
The consolidated financial statements have been
as unrelated directors and are
independent of
prepared in accordance with International Financial
management and free from any interest or business
Reporting Standards and include amounts that are
relationship which could, or could be perceived to
based on informed judgments and best estimates.
materially interfere with their ability to act in the best
The financial information presented in this annual
interests of the Company. This committee meets
report is consistent with the consolidated financial
periodically with management and
the external
statements.
Management
acknowledges
auditors
to
review accounting, auditing,
internal
responsibility
for
the
fairness,
integrity and
control and financial reporting matters. The Audit
objectivity of all
information contained
in the
Committee reviews the annual financial statements
annual report including the consolidated financial
before they are presented to the Board of Directors for
statements. Management is also responsible for the
approval and considers the
independence of the
maintenance of financial and operating systems,
auditors.
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.
The Board of Directors,
through
its Audit
Committee,
is
responsible
for ensuring
that
management fulfills its responsibilities for financial
The consolidated financial statements for the year
ended December 31, 2021 have been audited by Crowe
MacKay LLP external auditors,
in accordance with
Canadian generally accepted auditing standards on
behalf of
the shareholders. Their report
follows
hereafter.
James M. Bruchs
Chairman and Chief Executive Officer
May 31, 2022
Dr Gary A. Bojes
Chief Financial Officer
May 31, 2022
22 Crowe MacKay LLP
1100 - 1177 West Hastings Street
Vancouver, BC V6E 4T5
Main +1 (604) 687-4511
Fax +1 (604) 687-5805
www.crowemackay.ca
Independent Auditor's Report
To the Shareholders of Tsodilo Resources Limited
Opinion
We have audited the consolidated financial statements of Tsodilo Resources Limited (the "Group"), which
comprise the consolidated statements of financial position as at December 31, 2021 and December 31, 2020
and the consolidated statements of operations and comprehensive income (loss), changes in shareholders'
equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a
summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Group as at December 31, 2021 and December 31, 2020, and its
consolidated financial performance and its consolidated cash flows for the years then ended in accordance with
International Financial Reporting Standards.
Basis for Opinion
in accordance with Canadian generally accepted auditing standards. Our
We conducted our audit
responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the
Consolidated Financial Statements section of our report. We are independent of the Group in accordance with
the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and
we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 to the consolidated financial statements which describes the material uncertainty
that may cast significant doubt on the Group's ability to continue as a going concern. Our opinion is not
modified in respect of this matter.
Other Information
Management is responsible for the other information. The other information comprises:
•
Management's Discussion and Analysis
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be
materially misstated.
We obtained the other information prior to the date of this auditor's report. If, based on the work we have
performed on this other information, we conclude that there is a material misstatement of this other information,
we are required to report that fact in this auditor's report. We have nothing to report in this regard.
23 Responsibilities of Management and Those Charged with Governance for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with International Financial Reporting Standards, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or
has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Canadian generally accepted auditing standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
•
•
•
•
•
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor's report to the related
disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report.
However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including
the disclosures, and whether the consolidated financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are
24 responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where applicable, related safeguards.
The engagement partner on the audit resulting in this independent auditor's report is Diana Huang.
"Crowe MacKay LLP"
Chartered Professional Accountants
Vancouver, Canada
May 31, 2022
25 Tsodilo Resources Limited
Consolidated Statements of Financial Position
(In United States dollars)
ASSETS
Current
Cash
Accounts receivable and prepaid expenses
Total Current Assets
Exploration and Evaluation Assets (note 3)
Property, Plant and Equipment (note 4)
Total Assets
LIABILITIES
Current
Accounts payable and accrued liabilities (note 10)
Short-term lease liability (note 6)
Notes payable (note 5)
Total Current Liabilities
Long-term lease liability (note 6)
Total Liabilities
SHAREHOLDERS' EQUITY
Share capital (note 7)
Contributed surplus (note 7)
Foreign currency translation reserve
Deficit
Total Equity
Total Liabilities and Equity
Nature of operations (note 1)
Commitments and contingencies (note 13)
Subsequent events (note 15)
December 31
2021
December 31
2020
$ 4,713
35,970
40,683
6,813,782
212,009
$7,066,474
$ 890,036
4,578
937,709
1,832,323
17,055
1,849,378
50,896,526
11,881,374
(6,410,238)
(51,150,566)
5,217,096
$7,066,474
$ 5,620
60,473
66,093
7,063,327
248,086
$ 7,377,506
$ 821,774
--
1,055,735
1,877,509
--
1,877,509
49,518,357
11,639,437
(5,823,437)
(49,834,360)
5,499,997
$ 7,377,506
See accompanying notes to the consolidated financial statements
APPROVED ON BEHALF OF THE BOARD OF DIRECTORS
“s”
“s”
Jonathan R. Kelafant
Chairman, Audit Committee
James M. Bruchs
Chairman & CEO
26
Tsodilo Resources Limited
Consolidated Statements of Operations and Comprehensive Income (Loss)
(In United States dollars)
Years Ended December 31
2021
2020
Administrative Expenses
Corporate remuneration
Corporate travel and subsistence
Investor relations
Legal and audit
Filings and regulatory fees
Administrative expenses
Stock-based compensation (note 7)
Other Income (Expense)
Impairment of exploration and evaluation
Other services income, net of cost
Interest income
Gain on debt settlement
Foreign exchange gain (loss)
Gain/(Loss) for the year
Other Comprehensive Gain/(Loss)
Foreign currency translation
Total Other Comprehensive Gain/(Loss)
Total Comprehensive Income (Loss) for the year
$546,308
--
166,789
98,364
37,449
236,682
288,377
1,373,969
(9,273)
52,492
2
--
14,542
57,763
(1,316,206)
(586,801)
(586,801)
($1,903,007)
$426,842
1,903
7,029
61,074
36,506
203,068
44,417
780,839
--
101,626
2
28,747
(4,460)
125,915
(654,924)
(171,480)
(171,480)
($826,404)
Basic and diluted loss per share (note 9)
($0.03)
($0.01)
See accompanying notes to the consolidated financial statements
27
Tsodilo Resources Limited
Consolidated Statements of Changes in Shareholders’ Equity
(In United States dollars except for shares)
2021
Share Capital
Contributed Surplus
Shares Issued
Amount
Stock-based
compensation & Other
Foreign
Translation
Reserve
Deficit
Total
Equity
Balance January 1, 2021
Units Issued
Options exercised
Warrant exercised
Stock Based Compensation
Comprehensive loss
46,166,060
2,986,038
165,500
181,983
--
--
$49,518,357
1,151,821
126,257
100,091
--
--
$11,639,437
--
(46,440)
--
288,377
--
($5,823,437)
--
--
--
--
(586,801)
($49,834,360)
--
--
--
--
(1,316,206)
$5,499,997
1,151,821
79,817
100,091
288,377
(1,903,007)
Balance December 31, 2021
49,499,581
$50,896,526
$11,881,374
($6,410,238)
($51,150,566)
$5,217,096
See accompanying notes to the consolidated financial statements
2020
Share Capital
Contributed Surplus
Shares Issued
Amount
Stock-based
compensation & Other
Foreign
Translation
Reserve
Deficit
Total
Equity
Balance January 1, 2020
Options exercised in 2020
Stock Based Compensation
Comprehensive loss
45,347,310
818,750
--
--
$49,281,890
236,467
--
--
$11,689,724
(94.704)
44,417
--
($5,651,957)
--
--
(171,480)
($49,179,436)
--
--
(654,924)
$6,140,221
141,763
44,417
(826,404)
Balance December 31, 2020
46,166,060
$49,518,357
$11,639,437
($5,823,437)
($49,834,360)
$5,499,997
See accompanying notes to the consolidated financial statements.
28
Tsodilo Resources Limited
Consolidated Statements of Cash Flows
(In United States dollars)
Cash provided by (used in):
Operating Activities
Net Loss for the year
Adjustments for non-cash items:
Impairment on exploration and evaluation
Gain on debt settlement
Interest on lease liability
Foreign exchange loss (gain)
Stock-based compensation
Net change in non-cash working capital balances (note 14)
Investing Activities
Additions to exploration properties
Proceeds from sale of royalty
Additions to plant, property & equipment
Financing Activities
Payment of notes payable
Issuance of common shares and warrants – cash
Issuance of common shares and warrants – services
Cost of issuance
Options exercised
Cash payments on lease
Impact of exchange on cash
Change in cash - for the year
Cash - beginning of year
Cash - end of year
See accompanying notes to the consolidated financial statements.
Years Ended December 31
2021
2020
($1,316,206)
($654,924)
9,273
--
2,526
(14,542)
288,377
(1,030,572)
530,890
(499,682)
(267,583)
--
(18,833)
(286,416)
(30,145)
795,435
--
(21,908)
34,137
(6,870)
770,649
14,542
(907)
5,620
$ 4,713
--
(28,747)
--
4,460
44,417
(634,794)
410,811
(223,983)
(290,582)
500,000
--
(209,418)
(61,684)
--
--
--
--
--
(61,684)
(4,460)
21
5,599
$ 5,620
29
Tsodilo Resources Limited
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(All amounts are in U.S. dollars unless otherwise noted)
1. NATURE OF OPERATIONS
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 Company is considered to be in the exploration and development stage given that none of its properties are in
production and, to date, have not earned any revenues. The recoverability of amounts shown for exploration and
evaluation assets is dependent on the existence of economically recoverable reserves, the renewal or extension of
exploration licenses, obtaining the necessary permits to operate a mine, obtaining the financing to complete
exploration and development, and future profitable production. The Company is incorporated under the laws of the
Yukon Territory, Canada, under the Business Corporations Act of Yukon and the address of the Company’s registered
office is 161 Bay Street, P.O. Box 508 Toronto, Ontario, Canada, M5J 2S1. The Company currently exists under the
Business Corporations Act of Yukon and its common shares are listed on the Canadian TSX Venture Stock Exchange
(“TSXV”) under the symbol TSD.
These consolidated financial statements have been prepared on the basis of accounting principles applicable to a going
concern, which assumes that the Company will realize its assets and discharge its liabilities in the normal course of
business. The Company incurred a loss of $1,316,206 and comprehensive loss of $1,903,007 during the year ended
December 31, 2021 and as of that date, the Company had an accumulated deficit of $51,150,566 and negative working
capital of ($1,791,640). The Company has not generated any revenues or cash flows from operations since inception
and does not expect to do so for the foreseeable future. The Company’s continuation as a going concern depends on
its ability to successfully raise financing. Although the Company has been successful in the past in obtaining financing,
there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on
terms acceptable to the Company; therefore giving rise to a material uncertainty which may cast significant doubt as to
whether the Company’s cash resources and working capital will be sufficient to enable the Company to continue as a
going concern for the 12-month period after the date of these consolidated financial statements.
Consequently, management is pursuing various financing alternatives to fund operations and advance its business
plan. To facilitate the management of its capital requirements, the Company prepares annual expenditure budgets
that are updated as necessary depending on various factors, including successful capital deployment and general
industry conditions. The Company may determine to reduce the level of activity and expenditures further, or divest of
certain mineral property assets, to preserve working capital and alleviate any going concern risk.
The consolidated financial statements have been prepared on a going concern basis that contemplates the
realization of assets and discharge of liabilities at their carrying values in the normal course of business for the
foreseeable future; and do not give effect to adjustments that would be necessary to the carrying values and
classification of assets and liabilities should the Company be unable to continue as a going concern.
COVID-19 Global pandemic and Geopolitical risks
Measures and guidelines implemented by the Government of Botswana in late March 2020 which allowed the Company’s
exploration and evaluation activities to remain operational albeit limited throughout the pandemic restrictions have
gradually been rolled back as vaccination levels within Botswana have increased. Most of the Company’s workforce
(+99%) have been vaccinated. Although significant progress has been made in this area, the Company continues to
operate under its approved crisis management plan, designed to protect the health and well-being of our employees in
Botswana and elsewhere as well as the financial well-being of the business. The Company has continued with regular
health screening, temperature checks and the use of infrared measurements to prevent the spread of COVID-19. Although
many countries around the world have removed the public health measures implemented to reduce the spread of COVID-
19, uncertainty remains. It is possible that Tsodilo’s operations could be impacted in a number of ways including, but not
limited to: a suspension of exploration and evaluation activities, disruptions to supply chains and worker absenteeism due
to illness. While the impact of COVID-19 is expected to be temporary, the current circumstances remain dynamic and the
impacts on our financial position or operations cannot be reasonably estimated at this time.
In February 2022, Russia commenced a military invasion of Ukraine. In response, many jurisdictions have imposed strict
economic sanctions against Russia and its interests. While the Company does not have any operations in Ukraine or Russia,
30
its business may be impacted as the conflict and economic sanctions may give rise to indirect impacts, including but not
limited to, increased fuel prices, supply chain challenges and disruptions, logistics and transport disruptions and
heightened cybersecurity disruptions and threats. Increased fuel prices and ongoing volatility of such prices may have
adverse impacts on the Company’s costs of doing business. The implications could result in a global economic downturn
that could adversely affect the Company’s business. The continuance or escalation of the military conflict between Russia
and Ukraine and the corresponding economic sanctions imposed on Russia, may also result in increased volatility in the
market for the Company’s securities and could have other effects which are currently unknown. The Company cannot
accurately predict the impact that ongoing conflict in Ukraine will have on its financial position or operations. Uncertainty
about judgments, estimates and assumptions made by management during the preparation of the Company’s
consolidated financial statements related to potential impacts of the COVID-19 pandemic and the Ukraine-Russia conflict
on revenue, expenses, assets, liabilities, and note disclosures could result in a material adjustment to the carrying value of
the asset or liability affected.
2. Significant Accounting Policies
(a) Statement of Compliance with International Financial Reporting Standards
These consolidated financial statements are prepared in accordance with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations of the
International Financial Reporting Interpretations Committee (“IFRIC”).
These consolidated financial statements have been authorized for release by the Company’s Board of Directors on
May 31, 2022.
(b) Basis of Preparation
These consolidated financial statements have been prepared on a historical cost basis except for financial
instruments classified as fair value through profit or loss which are stated at their fair value. These consolidated
financial statements are presented in United States dollars and include the accounts of the Company and the
following direct and indirect subsidiaries:
Entity
Tsodilo Resources Bermuda Limited (“TRBL”) [Bermuda]
Bosoto (Proprietary) Limited (“Bosoto”) [Botswana]
Gcwihaba Resources (Proprietary) Limited (“Gcwihaba”) [Botswana]
Newdico (Proprietary) Limited (“Newdico”) [Botswana]
Idada Trading 361 (Pty) Ltd. (“Idada”) [South Africa]
2021
100%
100%
100%
100%
70%
2020
100%
100%
100%
100%
70%
The accounting policies set out below have been applied consistently to all periods and years presented.
(c) Significant Accounting Judgments, Estimates and Assumptions
The preparation of the consolidated financial statements in conformity with IFRS requires management to make
judgments, estimates and assumptions that affect the application of polices and reporting amounts of assets and
liabilities, income and expenses. Actual results may differ from these estimates.
Accounts that require estimates as the basis for determining the stated amounts
include stock-based
compensation expense. The amounts estimated for stock based compensation is calculated using the Black-
Scholes Option Pricing model, which requires significant estimates with respect to the expected life and
volatility of such instruments.
Significant judgments are required with respect to the carrying value of the Company’s exploration and
evaluation assets, the determination of the functional currency of the Company and its subsidiaries, the
recoverability of the Company’s deferred tax assets, potential tax exposures given the company operates in
multiple jurisdictions, and the going concern assumptions. In particular, the carrying value of the Company’s
exploration and evaluation assets is dependent upon the Company’s determination with respect to the future
prospects of its exploration and evaluation assets and the ability of the Company to successfully complete the
renewal or extension process for its exploration properties as required. The quantification of potential tax
exposures is dependent on the relevant tax authorities’ acceptance of the Company’s positions.
(d) Earnings (Loss) per Common Share
Earnings (loss) per share calculations are based on the net income (loss) attributable to common shareholders
31
for the year divided by the weighted average number of common shares issued and outstanding during the
year.
Diluted earnings per share calculations are based on the net income (loss) attributable to common shareholders
for the year divided by the weighted average number of common shares outstanding during the year plus the
effects of dilutive common share equivalents. This method requires that the dilutive effect of outstanding options
and warrants issued be calculated using the treasury stock method. This method assumes that all common share
equivalents have been exercised at the beginning of the year (or at the time of issuance, if later), and that the
funds obtained thereby were used to purchase common shares of the Company at the average trading price
of common shares during the year. The incremental number of common shares that would be issued is included
in the calculation of diluted earnings per share.
(e) Exploration and Evaluation Assets
Exploration and evaluation assets include acquired mineral use rights for mineral properties held by the
Company. The amount of consideration paid (in cash or share value) for mineral use rights is capitalized. The
amounts shown for exploration and evaluation assets represents all direct and indirect costs relating to the
acquisition, exploration and development of exploration properties, less recoveries, and do not necessarily
reflect present or future values. These costs will be amortized against revenue from future production or
written off if the exploration and evaluation assets are abandoned or sold. The Company has classified exploration
and evaluation assets as intangible in nature. Depletion of costs capitalized on projects put into commercial
production will be recorded using the unit-of-production method based upon estimates of proven and probable
reserves.
Proceeds received from farm-out agreements or recoveries of costs are credited against the cost of related claims.
Ownership of exploration and evaluation assets involves certain inherent risks, including geological, commodity
prices, operating costs, and permitting risks. Many of these risks are outside the Company’s control. The ultimate
recoverability of the amounts capitalized for exploration and evaluation assets is dependent upon the delineation
of economically recoverable ore reserves, the renewal or extension of exploration licenses, obtaining the necessary
financing to complete their development, obtaining the necessary permits to operate the mine, and realizing
profitable production or proceeds from the disposition thereof. Management’s estimates of recoverability of the
Company’s investment in its Botswana and South Africa Exploration and Evaluation Assets have been based on
current and expected conditions. However, it is possible that changes could occur which could adversely affect
management’s estimates and may result in future write-downs of exploration and evaluation assets carrying values.
See note 3 for additional disclosures related to license commitments and strategic partners commitments and earn-
in agreement.
Management periodically reviews the carrying values of its investments in exploration and evaluation assets and
will recognize impairment in value based upon current exploration results, the prospect of further work being
carried out by the Company and the assessment of future probability of revenues from the property or from the
sale of the property. A decision to abandon, reduce or expand activity on a specific property is based upon many
factors including general and specific assessments of mineral resources, anticipated future mineral prices,
anticipated costs of developing and operating a producing mine, the expiration date of mineral property leases and
the availability of financing. The Company does not set a pre-determined holding period for properties with
unproven resources. However, properties which have not demonstrated suitable prospects at the conclusion of
each phase of an exploration program are re-evaluated to determine if future exploration is warranted and that
carrying values are appropriate.
(f) Property, Plant and Equipment
Property, plant and equipment is stated at cost, less accumulated depreciation. Depreciation is calculated on a
straight-line basis over the following terms:
Hangar
Vehicles
Furniture and equipment
over remaining life of land lease
5 Years
3 – 4 Years
An item of property, plant and equipment is derecognized upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. Any gain or loss arising on disposal of the asset,
determined as the difference between the net disposal proceeds and the carrying amount of the asset, is
recognized in profit or loss.
32
Where an item of property, plant and equipment comprises major components with different useful lives, the
components are accounted for as separate items of plant and equipment. Expenditures incurred to replace a
component of an item of property, plant and equipment that is accounted for separately, including major
inspection and overhaul expenditures, are capitalized.
(g) Cash
Cash consists of cash held in banks and petty cash.
(h) Foreign Currency Translation
(i) Functional and presentation currency
The Company’s functional and presentation currency is the United States dollar (“U.S. Dollar”). The functional
currencies of the Company’s subsidiaries are as follows:
Tsodilo Resources Bermuda Limited
Gcwihaba Resources (Pty) Limited
Newdico (Pty) Limited
Bosoto (Pty) Limited
Idada Trading 361 (Pty) Ltd
(”TRBL”)
(“Gcwihaba”)
(“Newdico”)
(“Bosoto”’)
("‘Idada”)
U.S. Dollar
Botswana Pula
Botswana Pula
Botswana Pula
South African Rand
Each subsidiary and the Company’s parent entity determine their own functional currency and items included in the
financial statements of each entity are measured using that functional currency.
(ii) Transactions and balances
Transactions in foreign currencies are initially recorded by applying the exchange rates prevailing at the date of
the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into functional
currency at the exchange rate prevailing at the reporting date.
(iii) Translation of foreign operations
As at the reporting date the assets and liabilities of Gcwihaba, Newdico, Bosoto, and Idada are translated into
the presentation currency of the Company at the rate of exchange prevailing at the reporting date and their
revenue and expenses are translated at the average exchange for the period. On consolidation, the exchange
differences arising on the translation are recognized in other comprehensive income (loss) and accumulated in the
foreign currency translation reserve.
If Gcwihaba, Newdico, Bosoto, and Idada were sold, the amount recognized in the foreign currency reserve would be
realized and reflected in the statement of operations and comprehensive i nc om e (loss) as part of the gain or loss on
disposal.
(i)
Income Taxes
Current taxes are the expected tax payable or receivable on the local taxable income or loss for the year, using
the local tax rate enacted or substantively enacted at the reporting date, and includes any adjustments to tax
payable or receivable in respect of previous years.
Deferred income taxes are recorded using the liability method whereby deferred tax is recognized in respect to
temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be
applied to temporary differences when they are realized or settled, based on the laws that have been enacted or
substantively enacted by the reporting date. Deferred tax is not recognized for temporary differences which arise
on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affect
neither accounting, nor taxable profit or loss.
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the
extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred
tax assets are reviewed each reporting date and are reduced to the extent that it is no longer probable that
the related tax benefit will be realized.
33
(j)
Share-based Compensation
The Company follows the fair value method of accounting for stock option awards granted to employees and
directors, whereby services are rendered as consideration for equity instruments (equity-settled transactions).
The fair value of stock options is determined by the Black-Scholes Option Pricing model with assumptions for risk-
free interest rates, dividend yields, volatility of the expected market price of the Company’s common shares and an
expected life of the options. The number of stock option awards expected to vest are estimated using a
forfeiture rate based on historical experience and future expectations. The fair value of direct awards of stock
is determined by the quoted market price of the Company’s stock. Share-based compensation is amortized over
the vesting period of the related option to earnings and no portions were capitalized. Upon participants’
retirement from their duties, their shares are forfeited and any charges already recognized relating to unvested
options are reversed. When an award is cancelled by the entity or by the counterparty, any remaining element of
fair value of the award is expensed immediately through profit or loss.
The Company uses graded or accelerated amortization which specifies that each vesting tranche must be
accounted for as a separate arrangement with a unique fair value measurement. Each vesting tranche is
subsequently amortized separately and in parallel from the grant date.
Option-pricing models require the use of highly subjective estimates and assumptions including the expected
stock price volatility. Changes in the underlying assumptions can materially affect the fair value estimates.
(k) Severance Benefits
Under Botswana law, the Company is required to pay severance benefits for full-time employees upon the
completion of 5 years of continued service if the employee so elects or upon the termination of employment.
Severance is earned at the rate of one day per month for an employee with less than five years of service and
two days per month for employees with greater than five years of service. The specifics and benefits of the
severance program mandated in Botswana are extended to full-time employees residing and working outside of
Botswana. The cost of these severance benefits is accrued over the year of service until the benefit becomes
payable. Portions of the severance expenses are capitalized to exploration and evaluation assets.
(l)
Financial Assets
Under IFRS 9, all financial assets are
initially recorded at fair value and designated upon inception into one of
the following three categories: amortized cost, fair value through other comprehensive income (“FVOCI”) or at fair
value through profit or loss (“FVTPL”). All of the Company’s financial assets are classified as amortized cost,
being subsequently measured at amortized cost using the effective interest rate method.
(m) Financial Liabilities
All financial liabilities are initially recorded at fair value and designated upon inception as FVTPL or at amortized
cost. Financial liabilities classified as at amortized cost are initially recognized at fair value less directly
attributable transaction costs. After initial recognition, at amortized cost are subsequently measured at amortized
cost using the effective interest rate method. The effective interest rate method is a method of calculating the
amortized cost of a financial liability and of allocating interest expenses over the relevant year. The effective
interest rate is the rate that discounts estimated future cash payments through the expected life of the financial
liability. The Company’s accounts payable and accrued liabilities, and notes payable are classified as at amortized
cost. Financial liabilities classified as FVTPL include warrants with exercise prices denominated in a currency other
than the Company’s functional currency. Derivatives, including separated embedded derivatives are also classified
as FVTPL and recognized at fair value with changes in fair value recognized in earnings unless they are designated
as effective hedging instruments. Fair value changes on financial liabilities classified as FVTPL are recognized in
earnings. Transaction costs associated with FVTPL liabilities are expensed as incurred.
(n)
Impairment of Assets
At the end of each reporting period, the Company assesses each cash-generating unit to determine whether there
is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of the
fair value less cost to sell and the value in use. Fair value is determined as the amount that would be obtained
from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. In assessing
value in use, the estimated future cash flows are discounted to their present value using a discount rate that
reflects current market assessment of the time value of money and the risk of a specific asset. If the recoverable
amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to
its recoverable amount and the impairment loss is recognized in profit or loss for the period. For an asset that
34
does not generate largely independent cash inflows, the recoverable amount is determined for the cash
generating unit to which the asset belongs. Exploration and evaluation assets are excluded from the fair value
impairment test.
When an impairment subsequently reverses, the carrying amount of the asset (or cash generating unit) is
increased to the revised estimate of its recoverable amount, but to an amount that does not exceed the
carrying amount that would have been determined had no impairment loss been recognized for the asset (or
cash generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.
(o) Related Party Transactions
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party
or exercise significant influence over the other party in making financial and operating decisions. Related
parties may be individuals or corporate entities and includes, but is not limited to, key management personnel,
directors, affiliated companies, and project partners. A transaction is considered to be a related party transaction
when there is a transfer of resources, services or obligations between related parties.
(p) Share Capital
The Company engages in equity financing transactions to obtain the funds necessary to continue operations and
explore and evaluate resource properties. These equity financing transactions may involve issuance of common
shares or units. A unit comprises a certain number of common shares and a certain number of share purchase
warrants (“Warrants”). Depending on the terms and conditions of each equity financing agreement (“Agreement”),
the Warrants are exercisable into additional common shares prior to expiry at a price stipulated by the Agreement.
Warrants that are part of units are valued using residual value method which involves comparing the selling price of
the units to the Company’s share price on the announcement date of the financing. The market value is then applied
to the common share, and any residual amount is assigned to the warrants. Warrants that are issued as payment for
agency fee or other transaction costs are accounted for as share-based payments and are recognized in equity. When
warrants are forfeited or are not exercised at the expiry date, the amount previously recognized in equity is
transferred from reserves to deficit. In situations where share capital is issued, or received, as non-monetary
consideration and the fair value of the asset received, or given up is not readily determinable, the fair market value
(as defined) of the shares is used to record the transaction. The fair market value of the shares issued, or received, is
based on the trading price of those shares on the appropriate Exchange on the date the shares are issued.
(q) Provision for Environmental Rehabilitation
The Company recognizes liabilities for statutory, contractual, constructive or legal obligations associated with the
retirement of exploration and evaluation assets and equipment, when those obligations result from the acquisition,
construction, development or normal operation of the assets. The net present value of future rehabilitation cost
estimates arising from the decommissioning of plant and other site preparation work is capitalized to mining assets
along with a corresponding increase in the rehabilitation provision in the period incurred. Discount rates using a pre-
tax rate that reflect the time value of money are used to calculate the net present value. The rehabilitation asset is
depreciated on the same basis as mining assets. The Company’s estimates of reclamation costs could change as a
result of changes in regulatory requirements, discount rates and assumptions regarding the amount and timing of
the future expenditures. These changes are recorded directly to mining assets with a corresponding entry to the
rehabilitation provision. The Company’s estimates are reviewed annually for changes in regulatory requirements,
discount rates, effects of inflation and changes in estimates. Changes in the net present value, excluding changes in
the Company’s estimates of reclamation costs, are charged to profit or loss for the year. As at December 31, 2021 and
2020, the Company has determined that it does not have any decommissioning obligations.
(r)
Lease Liability Accounting Policy
At inception of a contract, the Company assesses whether the contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration.
Leases of right-of-use assets are recognized at the lease commencement date at the present value of the lease
payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the
lease, if that rate can be readily determined, and otherwise at the Company’s incremental borrowing rate. At the
commencement date, a right-of-use asset is measured at cost, which is comprised of the initial amount of the lease
liability adjusted for any lease payments made at or before the commencement date, plus any decommissioning and
restoration costs, less any lease incentives received.
35
Each lease payment is allocated between repayment of the lease principal and interest. Interest on the lease liability
in each period during the lease term is allocated to produce a constant periodic rate of interest on the remaining
balance of the lease liability. Except where the costs are included in the carrying amount of another asset, the
Company recognizes in profit or loss (a) the interest on a lease liability and (b) variable lease payments not included
in the measurement of a lease liability in the period in which the event or condition that triggers those payments
occurs. The Company subsequently measures a right-of-use asset at cost less any accumulated depreciation and any
accumulated impairment losses; and adjusted for any remeasurement of the lease liability. Right-of-use assets are
depreciated over the shorter of the asset’s useful life and the lease term, except where the lease contains a bargain
purchase option a right-of-use asset is depreciated over the asset’s useful life.
(s) New Standards, Amendments and Interpretations Not Yet Effective
Certain pronouncements were issued by the ISAB or the IFRS Interpretive Committee that are mandatory for
accounting periods beginning January 1, 2022 or later periods. These standards are not expected to have a material
impact on the Company.
Classification of Liabilities as Current or Non-current (Amendment to IAS 1)
The amendment to IAS 1 provides a more general approach to the classification of liabilities based on the
contractual agreements in place at the reporting date. These amendments are effective for the reporting dates
beginning on or after January 1, 2023.
3.
EXPLORATION AND EVALUATION ASSETS:
Exploration and evaluation assets are summarized as follows
Bosoto Botswana
Project
BK 16
Precious
Stones
Project
PL 217
Precious
Stones
Bosoto
Total
Idada
S. Africa
Precious
Metals
Gcwihaba
Botswana
Metals
TOTAL
Newdico
Botswana
Project
PL091
Industrial
Minerals
Stones
Balance at December 31, 2019 $3,731,339
$664,114
$4,395,453
$ --
$8,122
$2,988,189
$7,391,764
Additions
Net Exchange Differences
Subtotal
125,174
(96,594)
3,759,919
Royalty contribution/reduction
--
24,915
(17,258)
671,771
--
In exploration cost
(113,852)
4,431,690
--
Balance at December 31, 2020
3,759,919
671,771
4,431,690
150,089
133,875
7,816
141,691
--
141,691
115,380
Additions
Impairment
80,889
47,736
128,625
--
--
--
--
(7,650)
--
(330)
7,792
61,510
345,474
(67,545)
(173,911)
2,982,154
7,563,327
--
(500,000)
(500,000)
7,792
2,482,154
7,063,327
--
88,479
(1,623)
332,484
(9,273)
Net Exchange Differences
(273,285)
(82,111)
(355,395)
(17,366)
(142)
(199,853)
(572,756)
Balance at December 31, 2021 $3,567,524
$637,396
$4,204,920
$239,705
$--
$2,369,157
$6,813,782
36
TOTAL
$ --
--
--
--
--
--
--
$ 10,676
$16,180
5,442
2,898
1,832
1,647
13,854
52,130
64,901
11,592
1,832
1,920
39,409
196,650
Gcwihaba
Botswana
Metals
Precious
Metals
TOTAL
$ --
--
--
--
--
--
--
$ 11,019
$18,934
--
--
--
2,138
12,246
36,107
56,932
--
31,753
2,225
54,124
181,506
Exploration and evaluation additions for the year-ended December 31, 2021 are summarized as follows:
Bosoto Botswana
Project
BK 16
Precious
Stones
Project
PL 217
Precious
Stones
Bosoto
Total
Idada
S. Africa
Precious
Metals
Gcwihaba
Botswana
Metals
Newdico
Botswana
Project
PL091
Industrial
Minerals
Drilling Expenditures
$ 5,175
$ 5,239
$ 64
Amortization Drill Rigs, Vehicles & Trucks
GIS & Geophysics
Lab Analyses & Assays
License Fees
Office, Maintenance, & Consumables
Salaries, Wages & Services
4,479
2,898
--
89
12,644
55,604
--
2,898
--
65
6,672
38,037
4,479
5,796
--
154
19,316
93,641
$ 265
54,979
2,898
--
119
6,239
50,879
Balance at December 31, 2021
$80,889
$47,736
$128,625
$115,380
$ --
$88,479 $332,484
Exploration and evaluation additions for the year ended December 31, 2020 are summarized as follows:
Bosoto
Botswana
Newdico
Botswana
Idada
S. Africa
Project
BK 16
Precious
Stones
Project
PL 217
Precious
Stones
Bosoto
Total
Drilling Expenditures
$ 1,558
$ 749
$ 2,307
Amortization Drill Rigs, Vehicles & Trucks
GIS & Geophysics
Lab Analyses & Assays
License Fees
Office, Maintenance, & Consumables
Salaries, Wages & Services
--
--
31,753
87
20,015
71,761
--
--
--
--
5,046
19,120
--
--
31,753
87
25,061
90,881
Project
PL091
Industrial
Minerals
$ 5,608
56,932
--
--
--
16,817
54,518
Balance at December 31, 2020
$125,174
$24,915
$150,089
$133,875
$ --
$61,510 $345,474
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.
Exploration and Evaluation Assets (Royalties)
In the third Quarter 2017, the Company reached an agreement with Sandstorm Gold Ltd. (“Sandstorm”) (NYSE MKT:
SAND, TSX: SSL) to grant royalties on three projects in consideration of the payment of $1,500,000 USD.
The package of assets in the Royalty Sale includes:
the grant of a 1% Net Smelter Return (NSR) on the Company’s wholly owned Botswana subsidiary Gcwihaba
Resources (Pty) Ltd. prospecting metal licenses in northwest Botswana;
the grant of a 1% Gross Proceeds Royalty (GPR) on the Company’s Botswana wholly owned subsidiary Bosoto
(Pty) Ltd. precious stone prospecting license (PL217/2016) located in the Orapa Kimberlite Field; and,
the grant of a 1% NSR on the Company’s 70% owned South African subsidiary Idada 361 (Pty) Ltd. gold and silver
prospecting license located in the Barberton Greenstone Belt in the Mpumalanga province of South Africa.
Sandstorm shall have a right of first refusal with respect to any third-party bona fide offers to purchase a metal or precious
37
stone royalty on the properties.
On July 23, 2020, the Company reached an agreement with TBM (Pty) Ltd. ("TBM") to grant royalties (Royalty income) on
its Botswana subsidiary Gcwihaba (Pty) Ltd. ("Gcwihaba") then seven (7) metal prospecting licenses in consideration of
the payment of $500,000 USD.
The package of assets in the Royalty Sale includes:
the grant of a 0.5% Net Smelter Return or Net Mineral Return on Gcwihaba's five (5) prospecting metal licenses in
northwest Botswana.
Gcwihaba Resources (Pty) Ltd (“Gcwihaba”) – Botswana
In 2017, Gcwihaba, a wholly owned subsidiary of the Company, held twenty-one (21) metal (base, precious, platinum
group, and rare earth) Prospecting Licenses (PL) in the North-West district of which seven (7) were then in renewal. A
review of the merits of each license was undertaken in the fourth quarter of 2017 in an effort to determine which licenses
were the most prospective in terms of exploration, discovery and development and an economic resource. The review
determined that 7 licenses were more prospective than the others. A series of meetings were held with the Department
of Mines (“DOM”) and it was proposed that the Company would relinquish the aforesaid twenty-one (21) licenses in
exchange for an initial grant of the core seven (7) licenses. The proposal was accepted by the DOM and the 21 licenses
were relinquished at year-end and the core seven licenses were given an initial grant effective October 1, 2018. These
new licenses have an initial grant term of three (3) years to be followed by 2 two-year renewal periods. The
relinquishment of the aforementioned licenses or portions thereof did not cause a reduction or change in the continuing
overall exploration program nor impact the chances of the overall success of the program.
Two-year renewal applications were filed in the second quarter reducing the overall license package from 4,021 km2 to
2,465 km2 consisting of five (5) prospecting licenses. The reduction in the license area package neither impaired the
licenses nor had an impact of the prospectivity of the project area.
On November 30, 2021, PL’s 021- 024/2018 were renewed for a two-year term effective January 1, 2022. PL020 is pending
approval. The four licenses combined have a minimum exploration expenditure requirement of 8,020,080 BWP ($676,654)
USD as at December 31, 2021.
Bosoto (Pty) Ltd (“Bosoto”) - Botswana
Tsodilo was granted PL369/2014 over the BK16 kimberlite pipe through its 100% owned Botswana subsidiary,
Bosoto, effective October 1, 2014. The prospecting license was renewed for an additional two-year period
commencing October 1, 2017 and a second two-year renewal application was granted effective October 1,
2019. On June 21, 2021, a two-year extension of the license was granted effective October 1, 2021.
The diamondiferous BK16 kimberlite pipe is located within the Orapa Kimberlite Field in Botswana and covered by 25
meters of Kalahari Group sediments. BK16 is located 37 km east-southeast of the Orapa Diamond Mine AK01, 25 km
southeast of the Damshtaa Diamond Mine, and 13 km north-northeast of the Letlhakane Diamond Mine, all
operated by Debswana and 28 km east-northeast from Lucara Diamond Corporation's Karowe mine (F/K/A AK6).
Tsodilo has a 100% interest in Bosoto.
The Company estimated that it would take approximately BWP 42,002,000 ($3,374,969 USD as at December 31, 2021)
in expenditures, goods and services over the two year renewal period to continue the evaluation of the BK16 kimberlite’s
economic potential and if warranted the preparation of a compliant NI 43-101 Feasibility Study (FS). This estimate is
based on the agreed work plan with Ministry of Mineral Resources, Green Technology and Energy Security (MMGE). At
any point the work plan may be amended, and a new work plan agreed to with the MMGE.
PL 217/2016 is situated within the Orapa Kimberlite Field and is located some 10 km south of the Orapa Mining
area and with the same distance to the west of the Letlhakane Mining lease. It surrounds the Karowe Mining lease,
while the BK11 prospect is directly to the east of the license.
PL 217/2016 was acquired in the second quarter of 2017. The license has an effective date of January 1, 2017 for an initial
period of 3 years followed by two 2-year renewals. The first renewal was granted on June 29, 2020 with a commencement
date of July 1, 2020 for a period of two-years. The license currently covers an area of 292 square kilometers and has a
minimum exploration expenditure requirement of 1,002,920 BWP ($84,617 USD as at December 31, 2021.
38
Newdico (Pty) Ltd (“Newdico”) - Botswana
The Company holds a 100% interest in Newdico, which holds one (1) industrial minerals prospecting license PL091/2019,
effective January 1, 2020. The license comprises 580 square kilometers and has a proposed minimum spending
commitment of BWP 132,830 ($11,207 USD as at December 31, 2021).
Newdico also provides administrative, operational, exploration, geophysical and drilling services to the Company’s other
subsidiaries.
Idada Trading 361 (Pty) Ltd (“Idada”) – South Africa
The Company holds a 70% interest in its South African subsidiary, Idada. Idada made application for an exploration
license (Ref: MP30/5/1/1/2/1047PR) in the Barberton area in February 2012. During the second quarter 2015, notice was
received from the Department of Mineral Resources, South Africa which granted the Company the prospecting rights
for gold and silver in the applied for area subject to certain subsequent conditions being met. The Company has
fulfilled those requirements and the Prospecting Right, together with the EMP, was executed and became effective on
April 7, 2016. The Prospecting Right was been granted for a term of five years effective as of May 2015.
Notices were sent to all surface owners of the five farms informing the owners of our intent to access the property to
commence exploration activities. Three landowners, holding most of the target ground, have denied access. This issue has
been submitted to the Department of Mineral Resources (DMR) for resolution.
During the third quarter 2019, the Company was informed that certain portions of our license areas were designated as a
World Heritage site by UNESCO. UNESCO has informed the Company that in accordance with the Operational Guidelines
for the Implementation of the World Heritage Convention, UNESCO is investigating the situation that the Company
brought to their attention. UNESCO has informed the Company that according to IUCN, the Advisory Body to the
intergovernmental World Heritage Committee concerning nominations of natural heritage sites on the World Heritage
List, the overlapping prospecting license on the western portion of the property or of the presence of Tsodilo Resources
Ltd was not brought to the attention of IUCN during the evaluation process. The documentation related to the evaluation
and inscription of the site on the World Heritage List from UNESCO’s website at: http://whc.unesco.org/en/list/1575/documents .
As the responsibility for nominating sites to the World Heritage List and the management and protection of the World
Heritage properties inscribed is under the authority of the State Party of South Africa, UNESCO advised the Company that
they would be contacting the appropriate South African office for clarification. To date, it is the Company’s understanding
that neither the Department of Mineral Affairs (DMA) nor the Department of Environmental Affairs (DEA) has responded to
UNESCO’s inquiry. In addition to UNESCO’s inquiries, the Company also contacted the DMA for guidance and received a
response, but before the issue could be dealt with the South African government was shut down due to the COVID-19
virus. The Company will continue our efforts to engage the DMA once the government resumes its activities on a full-time
basis. In the interim, the Company has filed a renewal application to protect our license rights.
The license comprises 9,033 hectares and all expenditures have been curtailed until such time as access to the license
area is provided. In the fourth quarter of 2021, the Company determined to stop all efforts to protect its license rights as all
efforts to contact its Black Empowerment Partner and the DMA and DEA have failed as all parties are not responsive.
During the year ended December 31, 2021, the property was impaired in full.
Covid-19 Pandemic Relief
In the first Quarter of 2020, the Company initiated efforts to get Covid-19 relief from expenditure and work requirements
on our prospecting licenses due to the exceptional and debilitating global effects of the Covid-19 pandemic. In April 2020,
the Ministry of Mineral Resources, Green Technology and Energy Security informed those holding prospecting licenses
that they would entertain granting relief from work and expenditure requirements on a case-by-case basis. Applications
for relief were filed for the Gcwihaba and Bosoto licenses and on January 8, 2021 the Ministry in accordance with Section
22 of the Mines and Minerals Act, approved the cancellation of one (1) year of prospecting programme of Bosoto
Prospecting License No. PL 369/2014 and PL 217/2016 and Gcwihaba Prospecting Licenses Nos. PL 020 – 026/2018, with
an effect date from April 1, 2020.
39
4. PROPERTY, PLANT, AND EQUIPMENT
Cost
Hangar
Vehicles
Furniture and
Equipment
Right of
Use Asset
Total
As at December 31, 2019
$185,680
Disposals
Net Exchange Difference
As at December 31, 2020
As at December 31, 2020
Additions
Disposals
Net Exchange Difference
As at December 31, 2021
Accumulated Depreciation
As at December 31, 2019
Depreciation
Disposals
Net Exchange Difference
As at December 31, 2020
As at December 31, 2020
Depreciation
Disposals
Net Exchange Difference
As at December 31, 2021
Net book value
$ 977,992
(153,161)
(2,540)
(22,318)
$183,140
Hangar
$ 802,513
Vehicles
$183,140
--
--
(14,400)
$168,740
Hangar
$ 802,513
--
--
(63,100)
$739,413
Vehicles
$61,326
18,964
--
$955,944
8,181
(153,161)
1,053
(21,499)
$81,343
Hangar
$789,465
Vehicles
$81,343
19,734
--
(3,315)
$97,762
$789,465
5,321
--
(62,386)
$732,400
$ 446,842
--
(5,874)
$ 440,968
Furniture and
Equipment
$ 440,968
18,833
--
(33,305)
$426,496
Furniture and
Equipment
$280,347
29,787
--
(2,407)
$307,727
Furniture and
Equipment
$307,727
34,697
--
(29,352)
$313,072
$--
--
--
$--
Right of
Use Asset
$ --
27,211
--
(1,468)
$25,743
Right of
Use Asset
$--
--
--
--
$--
Right of
Use Asset
$--
5,149
--
$ 1,610,514
(153,161)
(30,732)
$ 1,426,621
Total
$1,426,621
46,044
--
(112,273)
$1,360,392
Total
$1,297,617
56,932
(153,161)
(22,853)
$1,178,535
Total
$1,178,535
64,901
--
--
(95,053)
$5,149
$1,148,383
As at December 31, 2020
$101,797
$13,048
$133,241
$--
$248,086
As at December 31, 2021
$70,978
$7,013
$113,424
$20,594
$212,009
For the year ended December 31, 2021, $64,901 (2020: $56,932) amount of amortization has been capitalized under
exploration properties.
5. NOTES PAYABLE
As at December 31, 2021, term notes payable in the amount of $937,709 were outstanding from a related party. The
notes have an annual interest rate of 8% and one of the notes carry a termination fee of 10% upon early redemption of
the note for which there is an embedded derivative arising – the fair value of this is NIL. There was no material gain /
(loss) arising on this. In addition, at the option of the note holder, the June and December 2019 notes can be converted to
stock at the discretion of the holder during future private placements that raise a minimum of CAD $500,000, of those
future private placements as a conversion price equal to that of the private placement.. The remaining notes are due on
demand.
40
The notes payable at December 31, 2021 are summarized as follows:
Balance
December 31, 2021
Balance
December 31, 2020
Changes
in 2021
Date
Interest
Rate
Termination
Fee
Maturity
Date
1-Oct-18
31-Dec-18
31-Jan-19
30-June-19
30-Sept-19
31-Dec-19
01-Oct-20
21-Jun-21
27-July-21
28-Aug-21
27-Sept-21
31-Dec-21
$ 5,819
($ 5,819)
347,579
85,000
293,687
36,462
95,146
192,042
(74,573)
(85,000)
(86,445)
(36,462)
(37,462)
--
26,500
26,500
27,000
25,500
102,235
Total
$1,055,735
($118,026)
$ --
273,006
--
207,242
--
57,684
192,042
26,500
26,500
27,000
25,500
102,235
$937,709
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
$ --
--
27,300
30-Dec-22
--
--
NIL
On Demand
--
NIL
NIL
NIL
NIL
NIL
NIL
NIL
--
On Demand
On Demand
On Demand
On Demand
On Demand
On Demand
On Demand
$27,300
*During the year-ended December 31, 2021, $273,006 of notes payable had its maturity extended from December 31,
2021 to December 31, 2022.
On January 5, 2021 $295,616 were retired vis-à-vis private placement participation.
On February 10, 2021 $19,800 in promissory notes were paid in cash.
On February 11, 2021 $10,345 in promissory notes were paid in cash.
On June 21, 2021 a promissory note was issued for $26,500 to an employee, who is a director of the Company.
The note is payable on demand and has an annual interest rate of 8%.
On July 27, 2021, a promissory note was issued for $26,500 to an employee, who is a director of the Company.
The note is payable on demand and has an annual interest rate of 8%.
On August 28, 2021, a promissory note was issued for $27,000 to an employee, who is a director of the
Company. The note is payable on demand and has an annual interest rate of 8%.
On September 27, 2021, a promissory note was issued for $25,500 to an employee, who is a director of the
Company. The note is payable on demand and has an annual interest rate of 8%.
On December 31, 2021, a promissory note was issued for $102,235 to an employee, who is a director of the
Company. The note is payable on demand and has an annual interest rate of 8%.
The notes payable at December 31, 2020 are summarized as follows:
Date
Balance
January 1, 2020
Changes
in 2020
Balance
December 31, 2020
Interest
Rate
Termination
Fee
Maturity
Date
01-Oct-18
31-Dec-18
31-Jan-19
30-Jun-19
30-Sep-19
31-Dec-19
01-Oct-20
Total
$20,000
444,343
85,000
293,687
98,146
95,146
$1,036,322
($14,181)
(96,764)
--
(61,684)
192,042
$19,413
$5,819
347,579
85,000
293,687
36,462
95,146
192,042
$1,055,735
8%
8%
8%
8%
8%
8%
8%
$2,000
44,434
8,500
8,646
3,646
3,746
$70,972
30-Sep-20
31-Dec-20*
31-Jan-21
31-Dec-20
31-Dec-20
31-Dec-20
30-June-21
*During the year-ended December 31, 2021, $273,005 of notes payable had its maturity extended from December 31,
2020 to December 31, 2021.
On October 1, 2020, a promissory note was issued for $192,042 to an employee, who is a director of the Company. The
notes are payable on demand and have an annual interest rate of 8%. This note was extended again to 2022.
On July 24, 2020, $61,684 in promissory notes were paid and retired to an employee and director of the Company.
On December 31, 2020, $110,945 in promissory notes were retired.
41
6. LEASE LIABILITY
Lease liability opening balance
Additions
Payments
Accretion
Exchange difference
Lease liability ending balance
Less current portion
Long-term portion
December 31
2021
$ --
27,211
(6,870)
2,526
(1,234)
21,633
(4,578)
$17,055
2020
$--
--
--
--
--
--
--
$--
During the year ended December 31, 2021 the Company recognized right of use assets and a corresponding lease liability of
$27,211. The incremental borrowing rate for the lease liability recognized was 10%.
7. SHARE CAPITAL
(a) Common Shares
Authorized, Issued and outstanding
The authorized capital stock of the Company comprises an unlimited number of common shares with no par value. Issued
and outstanding: 49,499,581 Common Shares as at December 31, 2021 and 46,166,060 Common Shares as at December
31, 2020. On March 4, 2021, the Company’s stock began trading on the US OTCQB Venture Market under the symbol
"TSDRF". The Company continues to trade on the Canadian TSX Venture Stock Exchange (“TSXV”) under the symbol TSD.
1)
Issued during the year-ended December 31, 2021:
On January 25, 2021, 2,686,038 Units were issued at a price of C$0.50 for proceeds to the Company of
$1,038,468 (C$1,321,409). Each unit includes one common share and one warrant entitling the holder thereof
to purchase one Common Share until the close of business on January 25, 2023 at USD $0.55. $17,312
(C$21,610) of issuance costs were netted against the proceeds.
On February 10, 2021, 300,000 units were issued at a price of C$0.50 for proceeds to the Company of $113,353
(C$144,293). Each unit includes one common share and one warrant entitling the holder thereof to purchase
one Common Share until the close of business on January 25, 2023 at USD $0.55. $4,596 (C$5,707) of issuance
costs were netted against the proceeds.
On July 12, 2021, 50,000 options were exercised for proceeds of $34,137 (C$42,500). The fair value of $18,875
(C$23,500) was reclassified from contributed surplus to share capital.
On September 30, 2021, 143,801 warrants were exercised for proceeds of USD $79,090.
On December 31, 2021, 38,182 warrants were exercised for proceeds of USD $21,007.
On December 31, 2021, 115,500 options were exercised for proceeds of $45,680 (C$58,375). The fair value of
$27,565 (C$40,245) was reclassified from contributed surplus to share capital.
2)
Issued during the year-ended December 31, 2020:
On December 31, 2020, 818,750 options were exercised for proceeds of $141,763 (C$181,188). The fair values
of $94,704 were reclassified from contributed surplus to share capital. The weighted average trading price on
date of the options exercise was C$0.47:
87,500 shares at a price of C$0.07 for proceeds to the Company of $4,792 (C$6,125). The fair value associated
with the exercised options that were reclassified from contributed surplus to share capital was $3,142.
56,250 shares at a price of C$0.09 for proceeds to the Company of $3,961 (C$5,063). The fair value associated
with the exercised options that were reclassified from contributed surplus to share capital was $2,460.
450,000 shares at a price of C$0.17 for proceeds to the Company of $59,854 (C$76,500). The fair value
associated with the exercised options that were reclassified from contributed surplus to share capital was
$39,959.
150,000 shares at a price of C$0.28 for proceeds to the Company of $32,861 (C$42,000). The fair value
associated with the exercised options that were reclassified from contributed surplus to share capital was
$21,698.
42
25,000 shares at a price of C$0.65 for proceeds to the Company of $12,713 (C$16,250). The fair value
associated with the exercised options that were reclassified from contributed surplus to share capital was
$9,193.
25,000 shares at a price of C$0.69 for proceeds to the Company of $13,496 (C$17,250). The fair value
associated with the exercised options that were reclassified from contributed surplus to share capital was
$9,193.
25,000 shares at a price of C$0.72 for proceeds to the Company of $14,083 (C$18,000). The fair value
associated with the exercised options that were reclassified from contributed surplus to share capital was
$9,193.
(b) Warrants
As at December 31, 2021, the following warrants were outstanding:
Number of Warrants – Units
Expiry
Exercise Price
(USD)
December 31
2020
Issued
Exercised
Expired December 31
January 25, 2023
February 10, 2023
$0.55
$0.55
--
--
--
2,686,038
300,000
(181,983)
--
2,986,038
(181,983)
--
--
--
2021
2,504,055
300,000
2,804,055
On January 25, 2021, the Company issued 2,686,038 warrants with an exercise price of $0.55, expiring on
January 25, 2023. As the strike price of these warrants is in U.S. Dollars, the warrants were classified as equity
instruments. The values of the units are equal to the value of the common shares at the issuance date.
On February 10, 2021, the Company issued 300,000 warrants with an exercise price of $0.55, expiring on
February 10, 2023. As the strike price of these warrants is in U.S. Dollars, the warrants were classified as equity
instruments. The values of the units are equal to the value of the common shares at the issuance date.
On September 30, 2021, 143,801 warrants were exercised for proceeds of USD $79,090.
On December 31, 2021, 38,182 warrants were exercised for proceeds of USD $21,007.
(c) Stock Option Plan
The Company has a stock option plan (“SOP”) providing for the issuance of options that cannot exceed
9,830,420 shares of common stock. The Company may grant options to directors, officers, employees, and
contractors, and other personnel of the Company or its subsidiaries. The exercise price of each option cannot be
lower than the market price of the shares being the closing price of the Company’s common shares on the Toronto
Stock Exchange the day before the grant date. Options generally vest ratably over an eighteen month period,
beginning with the date of issuance and every 6 months thereafter, and expire in five years from the date of
grant as determined by the Board of Directors. Stock options when exercise will result in equity contributions. On
May 20, 2021, shareholders voted to increase the number of common shares of the Corporation reserved for issuance
pursuant to the Stock Option Plan to 9,830,340 to reflect an amount equal to 20% of the outstanding common shares
outstanding as at May 20, 2021.
43
The following Table summarizes the Company’s stock option activity for the years ended December 31, 2021 and 2020:
Number of Options
Weighted Average
Exercise Price
Outstanding as at December 31, 2019
Granted
Forfeited
Exercised
Expired
Outstanding as at December 31, 2020
Granted
Exercised
Expired
Outstanding as at December 31, 2021
3,375,000
700,000
(50,000)
(818,750)
(500,000)
2,706,250
925,000
(165,500)
(425,000)
3,040,750
C$0.56
C$0.08
C$0.55
C$0.22
C$0.89
C$0.48
C$0.67
C$0.61
C$0.76
C$0.49
2021
On January 4, 2021, 175,000 stock options exercisable at C$0.72 expired.
On January 1, 2021, the Company issued 275,000 options at C$0.47 pursuant to its SOP.
On April 8, 2021, 250,000 stock options exercisable at C$0.79 expired.
On May 21, 2021, the Company issued 650,000 options at C$0.75 pursuant to its SOP.
On July 12, 2021, 50,000 options exercisable at C$0.85 were exercised.
On December 31, 2021, 25,000 options exercisable at C$0.07 were exercised.
On December 31. 2021, 12,500 exercisable at C$0.09 were exercised.
On December 31, 2021, 50,000 exercisable at C$0.69 were exercised.
On December 31, 2021, 28,000 options exercisable at C$0.75 were exercised.
2020
On January 2, 2020, 200,000 stock options exercisable at C$1.05 expired.
On January 2, 2020, the Company issued 275,000 options at C$0.07 pursuant to its SOP.
On March 27, 2020, 200,000 stock options exercisable at C$0.83 expired.
On April 30, 2020, 50,000 stock options exercisable at C$0.55 were forfeited.
On September 1, 2020, 100,000 stock options exercisable at C$0.70 expired.
On September 21, 2020, the Company issued 425,000 options at C$0.09 pursuant to its SOP.
On December 31, 2020, 818,750 options were exercised.
The following assumptions were used in the Black Scholes option pricing model to fair value the stock options
granted during the years ended December31, 2021 and 2020:
Expected lives
2021
2020
3.97 years
4.04 years
Expected volatilities (based on Company’s historical prices)
103.6-109.7%
91.8% - 95.7%
Expected dividend yield
Risk free rates
Weighted average fair value of option
0%
0%
0.26-0.58%
0.22% - 1.63%
$0.49
$0.05
44
The following table summarizes stock options outstanding as at December 31, 2021:
Options Outstanding
Options Exercisable
Exercise
Price (C$)
Number of
Outstanding
Options
Weighted
Average Exercise
Prices (C$)
Weighted
Average
Remaining
Contractual Life
(Years)
Number of
Exercisable
Options
Weighted
Average Exercise
Prices (C$)
Weighted
Average
Remaining
Contractual
Life (Years)
C$0.69
C$0.85
C$0.65
C$0.55
C$0.28
C$0.17
C$0.07
C$0.09
C$0.47
C$0.75
125,000
350,000
175,000
450,000
50,000
475,000
162,500
356,250
275,000
622,000
3,040,750
C$0.69
C$0.85
C$0.65
C$0.55
C$0.28
C$0.17
C$0.07
C$0.09
C$0.47
C$0.75
C$0.49
0.01
0.25
1.01
1.23
2.01
2.43
3.01
3.73
4.01
4.39
2.54
125,000
350,000
175,000
450,000
50,000
475,000
162,500
250,000
137,500
297,000
2,472,000
C$0.69
C$0.85
C$0.65
C$0.55
C$0.28
C$0.17
C$0.07
C$0.09
C$0.47
C$0.75
C$0.47
0.01
0.25
1.01
1.23
2.01
2.43
3.01
3.73
4.01
4.39
2.16
8. INCOME TAXES
The recovery of income taxes varies from the amounts that would be computed by applying the Canadian federal and
provincial statutory rate for 2021 of approximately 27% (2020: 27%) to loss before income taxes as follows:
Loss for the year
Income tax rate
Expected income tax recovery
Foreign operation taxed at lower rates
Permanent differences
Change in benefits not recognized
Provision for income taxes
December 31, 2021 December 31, 2020
($1,316,206)
??)
27.00%
($355,376)
4,420
76,654
274,302
$ --
($654,924)
27.00%
($176,829)
(2,911)
11,351
168,389
$ --
As of December 31, 2021 the following deferred tax assets and liabilities have been recognized:
Property, Plant and Equipment
Exploration & Evaluation Assets
Deferred tax liabilities
Tax losses carried forward
Net deferred income tax asset recorded
December 31, 2021
December 31, 2020
($24,000)
(2,424,000)
(2,448,000)
2,448,000
$--
($41,000)
(2,554,000)
(2,595,000)
2,595,000
$--
45
As at December 31, 2021, the Company has unrecognized deductible temporary differences aggregating to
$13,082,000 (2020: $12,345,000), that are available to offset future taxable income. However, these temporary differences
relate to companies with a history of losses, and as a result are not recognized.
Losses carried forward - Botswana
Losses carried forward - Canada
Other
December 31, 2021
December 31, 2020
$ 4,232,000
8,435,000
415,000
$4.500,000
7,458,000
387,000
$13,082,000
$12,345,000
The Canadian tax losses of $8,435,000 (2020: $7,458,000) expire from 2026 through to 2041. The majority of Botswana
tax losses can be carried forward indefinitely with the remainder expiring within five years.
Total assessable tax losses relating to the
activity in Botswana
9. LOSS PER SHARE
Net loss per share was calculated based on the following:
Net loss for the year
Effect of Dilutive Securities
Stock options and warrants
December 31, 2021 December 31, 2020
$15,732,000
$16,667,000
($1,316,206)
($654,924)
--
--
Non-diluted net earnings (loss) for the year
($1,316,206)
($654,924)
The diluted loss per share is the same as the basic loss per share) for the year ended December 31, 2021 and 2020
because the stock options and warrants were anti-dilutive and had no impact on the EPS calculation, n o n - d i l u t e d
shares 49,499,581(2020: 49,345,899). Weighted average shares used in the per share calculation were 48,994,653 (2020:
45,347,310).
10. RELATED PARTY TRANSACTIONS
Remuneration of Key Management Personnel of the Company
Short term employee remuneration and benefits
Stock based compensation
Total compensation attributed to key management personnel
2021
2020
$298,000
270,792
$568,792
$278,106
38,521
$316,627
During the year an individual related to the CEO provided administrative and management services to the
Company and was remunerated in 2021 in the amount of $48,000 (2020: $48,000).
During the year, an individual related to key management personnel of the Company received $5,970 in stock
based compensation during the year (2020: $NIL).
During the year, a board member was issued notes in the amount of $207,736 (2020: $843,576).
As at December 31, 2021, there was a total of $112,611 (2020: $85,038) payables to related parties included
within accounts payable and accrued liabilities.
There are no other related party transactions.
11. SEGMENTED INFORMATION
The Company is operating in one industry. As at December 31, 2021 the Company’s property, plant and equipment
in Botswana was $212,009 (2020: 248,086). No revenues were realized for exploration and evaluation properties that are
detailed in note 3 above. Segment long-term exploration and evaluations properties in Botswana were $6,813,782 (2020:
$7,055,535) and South Africa were $NIL (2020: $7,792).
46
12. FINANCIAL INSTRUMENTS
The Company’s financial instruments include cash, accounts receivable, accounts payable and accrued liabilities, lease
liabilities and notes payable. The carrying values of these items as presented in the consolidated financial statements are
reasonable estimates of fair values due to the maturity and the terms of these instruments.
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, foreign exchange 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 and stock options. 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. See note 3 for a description of royalty interests sold in 2020 which provided $500,000 in cash to be
used in further exploration and evaluation. In the first quarter of 2021, the Company raised USD $1,151,821 (C$1,465,702)
net of issuance costs by selling equity capital in the form of units. Each unit was priced at C$0.50 and includes one
common share and one warrant entitling the holder thereof to purchase one Common Share for a period of 24 months
from the date of issuance at an exercise price of USD $0.55. On July 12, 2021 options were exercised for $34,136
(C$42,500). On September 30, 2021 warrants were exercised in USD $0.55 per share for $79,090. On December 31, 2021
warrants were exercised in USD $0.55 per share for 21,007. On December 31, 2021 options were exercised for $45,674
(C$58,375). In order to facilitate the management of 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. However, there is no guarantee that such financing will be available when
required.
There has been no change in the Company’s approach to capital management during 2021. The Company is not subject
to externally imposed capital requirements.
(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 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 has a working capital deficiency of $1,791,640 at December 31, 2021 (2020:
1,811,417).
(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
accounts receivable. The Company limits exposure to credit risk on liquid financial assets through maintaining its cash
with high-credit quality financial institutions. The majority of the Company’s cash is held with a major Canadian based
financial institution.
There are no loss allowances required.
(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, and because the notes payable have fixed
interest rates, the Company’s exposure to interest rate risk is not significant.
(e) Foreign Exchange Risk
The Company is exposed to currency risks on its Pula denominated net assets due to changes
in the USD/BWP
exchange rate. Based on the net Pula denominated asset and liability exposures as at December 31, 2021, a ten
47
percentage change in the exchange rate would result in a ($84,259) (2020: $104,030) impact to the Company’s net
comprehensive income/(loss).
The Company issues equity in Canadian dollars and the majority of its expenditures are in U.S. dollars. The Company
purchases U.S. dollars based on its near term forecast expenditures and does not hedge its exposure to currency
fluctuations.
13. COMMITMENTS AND CONTINGENCIES
Prospecting Licenses
The Company holds prospecting licenses which require the Company to spend a proposed minimum amount on
prospecting over the period of the licenses as outlined in note 3.
Lease & Service Commitments
Currently, the aggregate minimum payments are as follows:
Year
Facility
Term
2022
2022
2022
2022
Hangar Maun1
Shakawe Plot2
Gaborone 3
Letlhakane Plot4
Total
2/01/2016 – 12/31/2026
1/01/2021 – 12/31/2025
2/01/2021 – 1/31/2022
2/21/2018 – 12/31/2068
Yearly Rental Services
BWP
151,400
82,080
-
29,998
263,475
22,710
-
98,000
-
120,710
Total
174,110
82,080
98,000
29,998
384,188
USD*
$14.690
6,925
8,268
2,531
$32,414
* aggregate costs converted at January 1 of the current calendar year
1Newdico purchased the hangar facility from Commercial Holdings (Pty) Ltd. (CHPT) in February 2016. The hangar facility resides on a
commercial plot located at the Maun International Airport rented by CHPT from Civil Aviation Authority of Botswana (CAAB). The
purchase agreement called for a transfer of the CPHT/CAAB lease to Newdico upon purchase of the hangar facility. The parties all agree
to the transfer to take place but to date, the lease transfer has not occurred. The lease has an effective date of January 1, 2016 and
continues for 10 years at 8% escalation annually which may be reviewed very three (3) years at market and commercial rates. The
initial monthly lease payment is 8,000 BWP / month in addition to a fee of 15% of monthly rental for security and general maintenance
at the airport complex.
2The lease has an effective date of January 1, 2021 and is renewable at the company’s option for an additional 6 years expiring on
December 31, 2025. The monthly lease payment is 6,420 BWP increasing 420 BWP annually in each successive year.
3The twelve month service agreement has an effective date of February 1, 2021 and is renewable at the company’s option for an
additional year expiring January 31, 2022. The monthly lease payment is 8,000 BWP/month.
4The lease term has an effective date of February 2018. Newdico’s obligations under the lease are effective as of October 1, 2020. The lease cost
is 29,998 BWP per annum which may be reviewed every five (5) years at market and commercial rates. The lease has a term of fifty (50) years
cancelable by either party on six (6) months notice.
14. NOTES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS
December 31, 2021 December 31, 2020
Net change in non-cash working capital balances:
(Increase) decrease in accounts receivable and prepaid expenses
Increase (decrease) in accounts payable and accrued liabilities
Increase in notes payable for operating activities
Total
Non-cash Financing and Investing Activities:
Issuance of common shares for accounts payable and accrued liabilities
Issuance of common shares for notes payable
Reclassification of accounts payable to notes payable
Lease assets acquired
$ 24,593
277,010
229,287
$530,890
$ 228,449
295,616
(207,735)
27,211
($ 28,598)
242,421
196,988
$410,811
$ 30,816
110,945
(192,043)
--
15. SUBSEQUENT EVENTS
A two-year renewal application for Bosoto PL 217/2016 was filed in the 1st Q of 2022.
Gcwihaba Prospecting Licenses 021-024/2018 were renewed effective January 1, 2022 for a two-year period.
On January 1, 2022, the Company issued 425,000 stock options at C$0.64 pursuant to its stock option plan.
On January 2, 2022, 125,000 stock options exercisable at C$0.69 expired.
On April 3, 2022, 350,000 stock options exercisable at C$0.85 expired.
48
Corporate Information
DIRECTORS
James M. Bruchs, Chairman
McLean, Virginia
Appointed as director in 2002
Jonathan R. Kelafant
Arlington, Virginia
Appointed as director in 2007
Thomas S. Bruington
Vancouver, British Columbia
Appointed as director in 2013
Mark Scowcroft
Victoria, Seychelles
Appointed as director in 2015
Blackie Marole
Gaborone, Botswana
Appointed as director in 2017
OFFICERS
James M. Bruchs, B.Sc., J.D.
Chairman and Chief Executive Officer
Appointed in 2002
Gary A. Bojes, CPA, Ph.D.
Chief Financial Officer
Appointed in 2007
CORPORATE HEAD OFFICE
TD Canada Trust Tower
Suite 2700
161 Bay Street, Box 508
Toronto, Ontario M5J 2S1
Telephone: (416) 572-2033
Facsimile: (416) 987-4369
Website: www.TsodiloResources.com
E-Mail: info@TsodiloResources.com
AUDITORS
Crowe Mackay LLP
Vancouver, Canada
LEGAL COUNSEL
Norton Rose Fulbright, LLP
Toronto, Ontario
REGISTRAR AND TRANSFER AGENT
Computershare Trust Company of Canada
Toronto, Ontario
STOCK EXCHANGE LISTING
TSX Venture Exchange
Trading Symbol: TSD
-bc-