Tsodilo Resources Limited
Annual Report 2022
TSODILO RESOURCES LIMITED
Management’s Discussion and Analysis
The Management’s Discussion and Analysis has been authorized for
release by the Company’s Board of Directors on May 1, 2023
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, 2022 and 2021.
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 1, 2023.
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 1 King Street West, 48th Floor, Toronto ON M5H 1A1 - Canada. 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 1, 2023, 52,338,022 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, 3,606,250 options are
outstanding of which 2,512,500 are exercisable at exercise prices ranging from CAD $0.07 - $0.75.
Expiry Date
January 1, 2028
July 1, 2027
January 1, 2027
May 1, 2026
January 1, 2026
Grant Date
January 1, 2023
July 1, 2022
January 1, 2022
May 21, 2021
January 1, 2021
September 21, 2020 September 21, 2025
January 2, 2020
June 6, 2019
January 2, 2019
January 2, 2025
June 6, 2024
January 2, 2024
Grant Price (CAD) Granted Outstanding
650,000
1,000,000
425,000
550,000
275,000
118,750
162,500
375,000
50,000
650,000
1,000,000
425,000
650,000
275,000
425,000
275,000
925,000
260,000
$0.20
$0.29
$0.64
$0.75
$0.47
$0.09
$0.07
$0.17
$0 28
Exercisable
162,500
500,000
318,750
550,000
275,000
118,750
162,500
375,000
50,000
2 As of May 1, 2023, 5,304,996 warrants are outstanding and exercisable as follows:
Grant Date
January 25, 2023
January 25, 2021
February 10, 2021
Expiry Date
January 25, 2025
July 25, 2023
August 10, 2023
Grant Price (USD)
$0.20
$0.55
$0.55
Granted Outstanding
2,500,941
2,500,941
2,504,055
2,686,038
300,000
300,000
Exercisable
2,500,941
2,504,055
300,000
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 1, 2023, 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
Karsten Busche
James M. Bruchs
Investor
Investor
Chairman and CEO
4,996,065
4,476,773
4,327,579
3,785,625
2,888,119
8.59%
8.55%
8.10%
7.23%
5.51%
Exploration Activities as at December 31, 2022
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 and a
5th license is currently under litigation for renewal (a summary of the litigation was provided in Note 13
of the Company’s audited consolidated financial statements for the year ended December 31, 2022).
The Company holds a 100% interest in its Botswana subsidiary, Bosoto (Pty) Limited (“Bosoto”), which
holds one (1) precious stone prospecting license; PL369/2014 for the area which contains the BK16
kimberlite.
The Company holds a 100% interest in Newdico (Pty) Limited (“Newdico”), which provides
administrative, operational, exploration, geophysical, and drilling services to the Company’s other
subsidiaries.
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 one prospecting license for precious stones, registered to Bosoto. This license is
summarized in Table 1.
Precious Stone Prospecting Licenses as at December 31, 2022
Table 1
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
BWP1
USD as at
Fee
Program
12/31/22
369/2014
1.02
10/01/21
9/30/23
1st Extension
1,000
20,000,000
40,002,000
3,089,586
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.
3
1.1 PL369/2014 (BK 16)
Bosoto was granted a 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
is 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).
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, Tsodilo Resources Bermuda Limited (“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, 2022
The diamondiferous BK16 kimberlite pipe is approximately six (6) hectares in size at the 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 (caliper) 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 Net
4
Present Value (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 $600-650/ct, the strategy of
developing a stand-alone full-size operation should be pursued. Still, further alternatives involved the
utilization of other processing plants in the OKF that are operating beneath their capacity.
These encouraging results suggest that BK16 has the potential to become a mineable asset and suggest that
the BK16 project employ a surface bulk sample method to augment the Phase 1 LDD sampling for its next
Phase II stage of evaluation.
Phase I SFD modelled grade, diamond value, and kimberlite value.
Table 2
Variable
Unit of
Measure
BK16
Sample
Grade
cpht
Diamond Value
US$/carat
Kimberlite Value US$/tonne
3.8
177
6.6
Current BK16 SFD Study
Min
4
281
11
P20
5
290
15
P80
7
600
38
Max
8
792
67
Heavy Mineral Analysis
Botswana International University of Science and Technology (BIUST) performed a heavy mineral chemistry
analysis on the VK3 phase from BK16 LDD samples. The study found that:
◊
◊
The heavy minerals are composed of garnets (mostly eclogitic and pyroxenitic garnets), ilmenite (Mg-
ilmenite), Phlogopite (Al-rich kimberlitic Phlogopite), olivine (forsterite and pyroxenes (diopside and
enstatite), accompanied by inclusions of Cr-magnetite and trace amounts of omphacite, augite,
chromite, barite, and calcite.
The xenocrysts provide evidence that the BK16 kimberlite pipe is a Group 1 kimberlite with xenocrysts
of eclogitic, pyroxenitic, and ultramafic/mafic MARID suite provenance.
Future Plans and Outlook for BK16
The encouraging results from the Phase I program justify moving on to Phase II which is to increase the number
of carats recovered significantly by processing a far larger sample which will lead to an increase in the certainty
of the grade and diamond value. Phase IIa will consist of the following:
Phase IIa Surface Bulk Sampling:
Extract ~20,000 metric tonnes of kimberlite to obtain 800 to 1,600 carats of diamonds;
Significantly improve the understanding of the grade of the deposit in cpht;
Solidify further the accuracy of the high diamond value in US$ 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;
Carry out hydrogeological, further independent Economic Modelling, an Environmental Impact
Assessment, and Feasibility level engineering studies;
Define an inferred resource consisting of the development of geological and domain models, and
geo-statistical analyses of grade ;
Further refine the accuracy of the economic fundamentals of the project to move towards detailed
feasibility studies and ultimately mining;
Determine Grade, Value per Size Fraction, and Size Fraction Distribution;
Utilize dry XRT and XRT sorting technologies to recover large and small diamond stones, and reduce
the risk of diamond damage from crushing; and
Understand mining constraints and the Life of the Mine to select an appropriate plant throughput.
5
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 overburden 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 the number of diamonds; and, a final optimized pit
design optimization which constructs 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
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.
Considering that the BK16 project is at an advanced exploration stage of development the potential for future
expansion and growth opportunities, a techno-economic model was undertaken by an independent contractor
to provide sound financial evaluation information.
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 and provide a solid foundation for advancing the BK16
project, where it is envisaged that this will lead to mining of the BK16 kimberlite.
A technical review of the infrastructure, engineering, project management, environmental, and human resource
studies were undertaken by an independent contractor.
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.
The license lies within the OKF and is situated some 10 km south of the Orapa Mining area and at the same
distance to the west of the Letlhakane Mining lease. It surrounds the Karowe Mining lease, while the BK11
prospect is direct 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, 2022
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 several potential alluvial
and kimberlite targets for further exploration.
Following this study, follow-up magnetometry and gravimetric surveys were undertaken. Detailed ground
magnetics surveys over selected targets were conducted in several stages, and totaled 612 survey line
kilometers. This further refined the understanding of the area and identified 12 kimberlite targets of which five
were a high priority. Additional high-resolution ground gravity surveys followed and were conducted along
lines perpendicular to the previously identified paleo-channels and downstream of AK6 and BK11. Modelling of
the ground magnetic and ground gravity data led to the identification of several paleo-channels. Where alluvial
gravel paleo-channels have characteristically lower densities, and as such can be identified as having a lower
gravity value than the surrounding areas. This modelling indicated significant overlaps between these ground
6
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 at 15 to 40m below
the surface had been noted.
A review of the Company’s extensive exploration work was performed in the fourth quarter and it was
determined that the gravity data revealed depths to interpreted gravel channels as too deep (up to 30m) and
therefore not likely to be channels but caused by sandstones. The Company also believes that there are not
enough gravel tonnages to make an economic project. Accordingly, the license was relinquished in its entirety
in the 4th quarter. The Company has written off the capitalized cost of $584,643 as impaired as at the year-
ended December 31, 2022.
2. METALS (BASE & PRECIOUS, PLATINUM GROUP METALS, AND RARE EARTH ELEMENTS) PROJECTS
Seven (7) PLs were reissued as initial grants effective October 1, 2018, for a period of three (3) years. Two-year
renewal applications were filed in the second quarter of 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 had no
impact on the prospectively 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 outlined in
Table 3.
Table 3: Gcwihaba Metal Licenses as at December 31, 2022
Prospecting
Km²
Grant
Expiry or
Current
Expenditure*
Total Expenditure
license
Number
Date
Renewal
Stage
Per Annum
from Grant Date and
Date
(BWP)
if held to Full License
Term
Rental
Work
BWP1
USD as at
Fee
Program
12/31/22
020/2018
454
NA
NA
In Renewal
NA
1,000,000
NA
NA
021/2018
573
1/01/22
12/31/23
1st Renewal
2,865
1,000,000
2,005,730
154,914
022/2018
161
1/01/22
12/31/23
1st Renewal
805
1,000,000
2,001,610
154,596
023/2018
492
1/01/22
12/31/23
1st Renewal
2,460
1,000,000
2,004,920
154,852
024/2018
782
1/01/22
12/31/23
1st Renewal
3,910
1,000,000
2,007,820
155,076
619,438
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.
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. 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);
2. Copper and Cobalt Exploration: Sedimentary Cu/Co (Katanga type sediments) within the entire
Neoproterozoic package;
3. Xaudum Gold Exploration: Gold mineralisation linked to the Xaudum Iron Formation; and
4. 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.
7
Summary of Work Performed as at December 31, 2022
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 detailed ground magnetics which has defined the extent of
the highly magnetic XIF. An airborne 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 meters) known as
the Kalahari Geochemistry Program (KGP) was conducted to 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 of 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’s 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 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 into Block 2a priority, and Block 2b). The Company created a 3-D model based on these holes
focussed on the area around the elongated “C” XIF target. The area is dominated by the DIM Geodomain. Using
the Company wireframes, Baker Geological Services Ltd (“BGS”) assessed the potential tonnage and grade
within the modelled Block 2a target by creating block models. The extent of the wireframes was limited by a
bounding surface so that the model was more restricted to areas around the drilling undertaken. The depth
extent of the model was also limited to the approximate depth of the drillholes, being approximately 215m
from the surface. It should be noted that the level of study at Block 2a is however considered conceptual at best
with limited exploration undertaken. The study noted that:
◊ Using average grades from the assay data and using density values determined from the Block 1
exploration, a minimum tonnage of between 100Mt and 300Mt has been calculated at a grade
between 20% Fe and 30% Fe.
◊ Using the Davis Tube results, at a grind size of 80 microns, a contained minimum concentrate of
between 20Mt and 60Mt can be determined.
8
755 assay results from 10 drill holes in Block 2a have been returned and confirm that Block 2a located 10
kilometers 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; and
o
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;
These results confirm that the units in Block 2a are a continuation of the same magnetite-rich
iron formation 10 kilometers south of Block 1; and
o Based on metallurgical Davis Tube Recovery (DTR) magnetic separation (P80 of 80 microns)
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.
In total, nineteen drillholes are planned to improve the confidence and model in the area, totaling 3,800m
of drilling. Drilling in Block 2 will commence in the second quarter of 2023.
Geotechnical Test Works: Tsodilo undertook 30 geotechnical lab test works on the important formations for
the Xaudum Iron Formation project including those that will make up the majority of the likely pit walls during
the mining of the iron. These tests work 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 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 the 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 target 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
9
interest that has been prioritized for drilling. Further geological interpretation and modelling have been on-
going and are 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 1822C26 (“C26”) and 1822C27(“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 81 Mt to 97 Mt of skarn with grades ranging from 0.05 % to 1.5 % Total Rare Earth
Elements Oxide (TREO). The C26 skarn tonnage ranges from 4 Mt to 5 Mt with grades from 0.05 % to 0.5 %
TREO. It has to be noted that these numbers are only for the modeled regions where there are drilled holes and
do not cover the whole skarn area as modeled from the surface magnetic expression. These conceptual skarn
anomaly Exploration Targets were generated by geologically modelling in 3 dimensions using the drill-hole
intersections of the skarn anomaly allowing volumes representing the 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 grades 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.
Fifty drillholes, each to be drilled to a depth of 250 m, are planned for drilling to fully define the extent of C26
and C27 skarn deposits. This gives a combined total depth of 12,000 m.
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 several 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.
10
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 ferroalloys, 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 concerning 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 products 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.
A series of east-west exploration drillholes across the interpreted XIF are therefore recommended, collaring the
holes within the centre of the interpreted XIF. Ideally, two drillholes would be completed at each site, so that the
initial hole can determine the dip direction of the hosting geology and allow the second drillhole to optimise
the intersection angle and traverse multiple geodomains if present. This type of strategy would allow the XIF
Geodomain to be assessed to allow a greater definition to follow-up drilling. Should exploration be successful,
infill programs could then be designed to target the most favourable material to allow classified mineral
resources to be developed.
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 alteration data logged and assay generated on geological cross
sections, interpolation of information into a 2D map, and improved structural interpretations, which will
ultimately lead to updated drill target recommendations. The 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 an 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.
Litigation:
On or about June 30, 2021, the Company's wholly owned Botswana subsidiary, Gcwihaba Resources (Pty) Ltd.
(Gcwihaba) submitted prospecting renewal license applications for its Xaudum Iron Formation project in
northwest Botswana. Of the then current 7 licenses, two licenses were relinquished in their entirety and 5 were
submitted for renewal. Collectively 50% of the combined license area in the 7 licenses was relinquished
pursuant to Section(s) 17 and 19 of the Mines and Minerals Act.
11
Four of the five licenses that contain the vast bulk of the exploration target in the Xaudum Iron Formation
project were renewed as submitted, effective January 1, 2022, while the fifth license, PL020/2018, continued in
renewal.
Despite periodic inquiries as to the license renewal status, Tsodilo was first apprised of a possible reason for the
continued delay on April 26, 2022, when the Minister of Minerals and Energy (MME) informed Gcwihaba that
part of the area included in license PL020/2018 is in the buffer zone surrounding the Okavango Delta, a
UNESCO World Heritage Property, and that any prospecting activities in that area would be subject to
environmental assessment measures.
On April 27, 2022, Gcwihaba promptly responded by reminding the MME that
the license in question has existed in its present form since 2008, six years before the buffer zone was
(i)
established;
(ii)
prior to establishment of the current buffer zone in 2014, significant exploration had already been
conducted in that area and a compliant NI 43-101 Inferred Mineral Resource Statement prepared by SRK was
submitted to the MME identifying a mineral resource of 441 Mt grading 29.4% Fe;
(iii)
Company’s identified mineral resource; and
(iv)
times without any controversy.
when it was established in 2014, the current buffer zone encroached on a portion (169 Mt) of the
the prospecting license including this area has since that time been renewed and re-granted multiple
Gcwihaba also expressed complete agreement that prospecting, and mining activities were permitted in the
buffer zone subject to various environmental standards and practices spelled out in Botswana law, and further
affirmed its commitment to comply with all such requirements and to develop the Xaudum Iron Formation
project in an environmentally friendly manner.
With apparent agreement as to the facts and applicable law, and with renewed and unequivocal assurance from
Gcwihaba that it would be sensitive to environmental issues and would fully comply with all laws and
regulations in this regard, it was expected that any concerns had been more than addressed and that the
PL020/2018 license would now be renewed in short order.
However, in a letter received on June 15, 2022, despite its earlier clear statements to Tsodilo that exploration
and mining could be conducted in the buffer zone, and a history of similar statements by the Botswana
government in multiple earlier UNESCO filings, the Ministry advised that the PL020/2018 license would not be
renewed if it included any areas located within the buffer zone.
In an effort to reach a mutually acceptable resolution, the Company filed a revised renewal application reducing
the buffer zone area of the license block to only an area proximate to a paved airport landing strip, a hospital
and a shopping center all established, extended or rebuilt after 2014 and all within the buffer zone. To date, the
Company has received no response to the revised license application.
While the bulk of the Company’s Xaudum Iron Formation resource remains free of any dispute, the area within
the buffer zone is of sufficient value that the Company believes further efforts are appropriate to protect
shareholder interest, and further believes that the conduct of the Botswana government in connection with the
license renewal process has left no recourse other than seeking resolution in the courts. Accordingly, litigation
was initiated on October 31, 2022 and an oral hearing was held in the High Court in Maun, Botswana on April
18, 2023. A decision on the matter is expected in the 3rd quarter of 2023.
For more detailed information on all the above, and in the interest of transparency, the Company has
established a landing page regularly updated to include all records related to this matter. Please see:
https://tsodiloresources.com/s/MMGE.asp.html.
12
3. Newdico (Proprietary) Limited (“Newdico”) - Botswana
The Company holds a 100% interest in Newdico (Pty) Limited (“Newdico”) which held 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 which
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 its 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.
Summary of Work Performed as at December 31, 2022
A desktop study of the regional geophysical magnetic data was undertaken in the license area 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 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 sedimentary
rocks 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. Eight
drill targets were located to drill shallow holes to a depth just below the Kalahari, which is expected to be less
than 50 m.
However, in the 4th quarter of 2022, a review of available geological, geophysical, and hydrogeological data
indicated a thick Kalahari and basaltic cover, making it uneconomical to exploit. There are no outcrops within
the license area and exploration to find an economical deposit was driven by geophysics. The Company,
therefore, decided to relinquish the license in its entirety. The Company has written off the capitalized cost of
$291,678 as impaired as at the year-ended December 31, 2022.
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 an application for an
exploration license (Ref: MP30/5/1/1/2/1047PR) in the Barberton area in February 2012. During the second
quarter of 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, denied
access. This issue has been submitted to the Department of Mineral Resources (DMR) for resolution.
During the third quarter of 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 by 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
13
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.
In the fourth quarter of 2021, the Company determined to stop all efforts to perfect 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 the capitalized cost of $7,650 as impaired as at the year-ended
December 31, 2021.
Exploration Activities as at December 31, 2022
Exploration and evaluation additions for the year-ended December 31, 2022 are summarized as follows:
Bosoto Botswana
Newdico
Gcwihaba
Botswana
Botswana
Project
BK 16
Project
PL 217
Bosoto
Project
PL091
Metals
Precious
Precious
Total
Industrial
TOTAL
Stones
Stones
Minerals
Drilling Expenditures
$ 2,180
$ 147
$ 2,327
Amortization Drill Rigs, Vehicles & Trucks
4,022
Geophysics
Lab Analyses & Assays
License Fees
Maintenance, & Consumables
Salaries, Wages & Services
150
837
80
8,849
17,455
--
150
--
117
6,446
6,309
4,022
300
837
197
15,295
23,764
$ 457
49,371
--
--
150
6,385
7,787
$ 8,149
$10,933
4,887
22,346
19,157
820
6,704
13,814
58,280
22,646
19,994
1,167
28,384
45,365
Balance at December 31, 2022
$33,573
$13,169
$46,742
$64,150
$75,877 $186,789
14
Exploration and evaluation additions for the period ended December 31, 2021 are summarized as follows:
Bosoto Botswana
Newdico
Gcwihaba
Project
Project
BK 16
PL 217
Bosoto
Botswana
Botswana
Project
PL091
Metals
Precious
Precious
Total
Industrial
TOTAL
Stones
Stones
Minerals
Drilling Expenditures
$ 5,175
$ 64
$ 5,239
$ 265
$ 10,676
$16,180
Amortization Drill Rigs, Vehicles & Trucks
Geophysics
Lab Analyses & Assays
License Fees
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
54,980
2,898
--
119
6,239
50,879
5,442
2,898
1,832
1,647
64,901
11,592
1,832
1,920
13,854
39,409
52,130
196,650
Balance at December 31, 2021
$80,889
$47,736 $128,625
$115,380
$88,479 $332,484
LIQUIDITY AND CAPITAL RESOURCES
As at December 31, 2022, the Company had a negative working capital of ($2,570,493) [2021: ($1,791,640)],
which included cash of $40,049 (2021: $4,713). 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.
As at December 31, 2022, term notes payable in the amount of $1,606,046 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. In
addition, at the option of the note holder, the December 2018 note 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 at the price of the private placement. The remaining notes are due on demand.
The notes payable at December 31, 2022 are summarized as follows:
Date
Balance
12/31/2021
Changes in
2022
Balance
12/31/2021
31-Dec-18
$273,006
30-Jun-19
31-Dec-19
01-Oct-20
21-Jun-21
27-Jul-21
28-Aug-21
27-Sep-21
31-Dec-21
30-Jun-22
21-Sep-22
30-Sep-22
31-Dec-22
Total
207,242
57,684
192,042
26,500
26,500
27,000
25,500
102,235
451,159
25,000
100,738
91,440
Interest
Rate
8%
Termination
Fee
$27,300
Maturity
Date
31-Dec-23*
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
On Demand
On Demand
On Demand
On Demand
On Demand
On Demand
On Demand
On Demand
On Demand
19-Dec-22**
On Demand
On Demand
$273,006
207,242
57,684
192,042
26,500
26,500
27,000
25,500
102,235
451,159
25,000
100,738
116,440
$937,709 $668,337 $1,606,046
$27,300
15
*During the year-ended December 31, 2022, $273,006 of notes payable had its maturity extended from
December 31, 2022 to December 31, 2023.
** The promissory note of $25,000 dated September 21, 2022 has been repaid subsequent to year end.
On June 30, 2022, a promissory note was issued for $451,159 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 30, 2022 a
promissory note was issued for $100,739 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 21, 2022 a promissory note was issued for $25,000. The note matured on December 19,
2022 and has an annual interest rate of 8%.
On September 30, 2022 a promissory note was issued for $100,738 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, 2022 a promissory note was issued for $91,440 to an employee, who is a director of the
Company. The note is payable on demand and has an annual interest rate of 8%.
As at December 31, 2021, term notes payable had outstanding balances of $937,709 from related parties,
contractors and employees as settlement of compensation, service fees and expenses payable.
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-Jun-19
30-Sep-19
31-Dec-19
01-Oct-20
21-Jun-21
27-Jul-21
28-Aug-21
27-Sep-21
31-Dec-21
$5,819
($5,819)
347,579
(74,573)
85,000
(85,000)
293,687
(86,445)
36,462
95,146
192,042
(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 On Demand
NIL On Demand
NIL On Demand
NIL On Demand
NIL On Demand
NIL On Demand
NIL 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%.
16 Financial Instruments
The carrying amounts reflected in the consolidated Statement of Financial Position for cash, accounts
receivable, accounts payable and accrued liabilities, lease 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 decreased to an outlay of
($804,138) for the year-ended December 31, 2022 from an outlay of ($1,030,572) for the year-ended December
31, 2021. Overall operating expenses decreased for the year-ended December 31, 2022 by $156,068 when
compared to the year-ended December 31, 2021. Large operating expense changes for 2022 include corporate
remuneration decrease of $50,146, investor relations decrease of $143,016, and stock-based compensation
increase of $47,573 when compared to 2021. Impairment write-off of exploration and evaluation was the
largest increase for the year-ended December 31, 2022 of $867,078 compared to 2021. Other services income
in 2022 increased by $23,463 when compared to 2021. The impact on Comprehensive loss for the year was
foreign exchange translation loss of $528,864 in 2022 compared to a loss of $586,801 in 2021.
17
Annual Information
(in US Dollars)
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
Fiscal Year
December 31
2022
($2,019,718)
($0.04)
($0.04)
($528,864)
($2,548,582)
($0.05)
($0.05)
$5,808,293
$10,950
$--
Fiscal Year
December 31
2021
Fiscal Year
December 31
2020
($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
$--
$--
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
Quarter 1
Quarter 2
Quarter 3
Quarter 4
($89,776)
($0.00)
($0.00)
($1,209,629)
($0.03)
($124,636)
($0.00)
($0.00)
($145,209)
($0.00)
$320,401
$0.01
$0.01
$452,654
$0.01
($760,913)
($0.02)
($0.02)
$75,780
$0.00
Diluted comprehensive income (loss) per share
($0.03)
($0.00)
$0.01
$0.00
Total assets
Total long-term liabilities
Quarterly Information
(in US Dollar)
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
$6,637,478
$--
$6,693,750
$--
$6,982,140
$--
$7,377,506
$--
Quarter 1
Quarter 2
Quarter 3
Quarter 4
($56,792)
($0.00)
($0.00)
($589,817)
($0.01)
($463,100)
($0.01)
($0.01)
$14,660
$0.00
($281,075)
($0.00)
($0.00)
($724,917)
($0.01)
($515,239)
($0.01)
($0.01)
($602,933)
($0.01)
Diluted comprehensive income (loss) per share
($0.01)
$0.00
($0.01)
($0.01)
Total assets
Total long-term liabilities
Quarterly Information
(in US Dollars)
Fiscal Period ended December 31, 2022
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
$7,431,730
$--
$7,621,126
$--
$7,162,146
$--
$7,066,474
$17,055
Quarter 1
Quarter 2
Quarter 3
Quarter 4
($158,632)
($0.00)
($0.00)
($7,511)
($0.00)
($275,537)
($0.01)
($0.01)
($1,114,199)
($0.02)
($253,528)
($0.01)
($0.01)
($1,074,523)
($0.02)
($1,332,021)
($0.03)
($0.03)
($352,349)
($0.01)
Diluted comprehensive income (loss) per share
Total assets
Total long-term liabilities
($0.00)
$7,261,148
$17,478
($0.02)
$6,415,393
$16,200
($0.02)
$5,605,069
$14,969
($0.01)
$5,808,293
$10,950
18 Investing Activities
Cash flow applied in investing activities decreased to ($128,488) for the year-ended December 31, 2022 (2021:
$286,416).
Total expenditures of $186,769 on exploration properties for the year-ended December 31, 2022 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
For the year year-ended December 31, 2022, 337,500 stock options were exercised for $29,502 (C$38,375).
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 21,001. On December 31, 2021 options were exercised for
$45,674 (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
19
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 Gcwihaba and Bosoto 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".
RESULTS OF OPERATIONS
On a consolidated basis, the Company recorded a comprehensive net loss of ($2,548,582) for the year-ended
December 31 2022 – ($0.04) per common share, compared to a comprehensive net loss of ($1,903,007) for the
year-ended December 31, 2021 ($0.03) per common share.
Total capitalized exploration expenditures including amortization of property, plant and equipment used in
exploration activities on all projects amounted to net $5,572,595 as at December 31, 2022 compared to
$6,813,782 as at December 31, 2021. Total capitalized exploration expenditures incurred on the Newdico
project as at December 31, 2022 was $NIL compared to 239,705 as at December 31, 2021. Additions of $64,150
in 2022 were offset by exchange translations and impairment in 2022. Total capitalized exploration
expenditures incurred on Gcwihaba’s projects as at December 31, 2022 were $2,242,106 compared to
$2,369,157 as at December 31, 2021. Additions of $75,877 in 2022 were offset by exchange translations in
2022. Total capitalized exploration expenditures incurred on Bosoto’s projects as at December 31, 2022 were
$3,330,489 compared to $4,204,920 as at December 31, 2021. Additions of $46,742 in 2022 were offset by
exchange translations and impairment in 2022. A table is presented in the Exploration and Evaluation Additions
section above with specific details.
PERSONNEL
At December 31, 2022, the Company and its subsidiaries employed fifteen (15) compared to fifteen (15) at
December 31, 2021, including senior officers, administrative and operations personnel including those on a
short-term service basis.
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.
20
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 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.
The accompanying consolidated audited financial statements for the year-ended December 31, 2022, 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 ($2,019,718) and comprehensive loss of ($2,548,582) during the year ended December 31, 2022 and as of
that date, the Company had an accumulated deficit of $53,170,284 and negative working capital of
($2,570,493). 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,
2022. 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 issue
of new equity or debt instruments, the entering into of joint venture arrangements or the exercise of warrants
and options for the purchase of common shares. However, there is no assurance 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.
21
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. The 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 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
22
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.
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, 2023 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.
23
Amendments to IAS 1 and IFRS Practice Statement 2 – Disclosure of Accounting Policies
These amendments continue the IASB's clarifications on applying the concept of materiality. These amendments
help companies provide useful accounting policy disclosures, and they include: requiring companies to disclose
their material accounting policies instead of their significant accounting policies; clarifying that accounting
policies related to immaterial transactions, other events or conditions are themselves immaterial and do not
need to be disclosed; and clarifying that not all accounting policies that relate to material transactions, other
events or conditions are themselves material. The IASB also amended IFRS Practice Statement 2 to include
guidance and examples on applying materiality to accounting policy disclosures. These amendments are
effective for reporting periods beginning on or after January 1, 2023.
Amendments to IAS 8 – Definition of Accounting Estimates
These amendments clarify how companies distinguish changes in accounting policies from changes in
accounting estimates, with a primary focus on the definition of and clarifications on accounting estimates. The
distinction between the two is important because changes in accounting policies are applied retrospectively,
whereas changes in accounting estimates are applied prospectively. Further, the amendments clarify that
accounting estimates are monetary amounts in the financial statements subject to measurement uncertainty.
The amendments also clarify the relationship between accounting policies and accounting estimates by
specifying that a company develops an accounting estimate to achieve the objective set out by an accounting
policy. These amendments are effective for reporting periods 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
For the year ended
December 31
2022
2021
$333,333
238,221
$571,554
$298,000
270,792
$568,792
During the year an individual related to the CEO provided administrative and management
services to the Company and was remunerated in 2022 in the amount of $48,000 (2021: $48,000).
During the year, an individual related to key management personnel of the Company received
$12,229 in stock-based compensation during the period (2021: $5,970).
During the period, a board member was issued notes in the amount of $643,337 (2021: $207,736).
As at December 31, 2022, there was a total of $26,852 (2021: $112,611) payables to related parties
included within accounts payable and accrued liabilities. The amounts are unsecured, non-interest
bearing and are due on demand.
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
24
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 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.
James M. Bruchs
Chairman and Chief Executive Officer
Gary A. Bojes
Chief Financial Officer
25
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26 TSODILO RESOURCES LIMITED
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
27 Financial Reporting Responsibility of Management
The annual report and consolidated financial
reporting
and
internal
control.
The Audit
statements have been prepared by management.
Committee is composed of three directors, all of
The consolidated financial statements have been
whom qualify as unrelated directors and are
prepared
in
accordance with
International
independent of management and free from any
Financial Reporting Standards and
include
interest or business relationship which could, or
amounts that are based on informed judgments
could be perceived to materially
interfere with
and best estimates. The financial
information
their ability to act in the best interests of the
presented
in this annual report
is consistent
Company. The Audit Committee reviews the annual
with
the consolidated
financial
statements.
financial statements before they are presented to
Management acknowledges responsibility for the
the Board of Directors for approval and considers
fairness,
integrity
and objectivity of
all
the independence of the auditors.
The consolidated financial statements for the year
ended December 31, 2022 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.
information contained
in
the annual
report
including the consolidated financial statements.
Management
is
also
responsible
for
the
maintenance of financial and operating systems,
which
include effective controls
to provide
reasonable assurance that assets are properly
protected and that relevant and reliable financial
information
is produced. Our
independent
auditors have the responsibility of auditing the
consolidated financial statements and expressing
an opinion on them.
The Board of Directors,
through
its Audit
Committee,
is responsible
for ensuring that
management
fulfills
its
responsibilities
for
financial
James M. Bruchs
Chairman and Chief Executive Officer
May 1, 2023
Dr. Gary A. Bojes
Chief Financial Officer
May 1, 2023
28 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 Auditors' 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, 2022 and December 31, 2021 and
the consolidated statements of operations and comprehensive income (loss), 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, 2022 and December 31, 2021, 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
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities
under those standards are further described in the Auditors' 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 of 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.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the consolidated financial statements of the year ended December 31, 2022. In addition to the matter described
in the Material uncertainty related to going concern section, we have determined the matters described below to
be a key audit matter to be communicated in our report. These matters were addressed in the context of our
audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Recoverability of Exploration and Evaluation Assets
As disclosed in Note 3 of the consolidated financial statements, the carrying value of exploration and evaluation
assets represents a significant asset of the Group. Refer to Note 2 of the consolidated financial statements for a
description of the accounting policy and significant judgments applied to exploration and evaluation assets.
29 At each reporting period end, management applies judgment in assessing whether there are any indicators of
impairment relating to exploration and evaluation assets. If there are indicators of impairment, the recoverable
amount of the related asset is estimated in order to determine the extent of any impairment. Indicators of
impairment may include (i) the period during which the entity has the right to explore in the specific area has
expired during the year or will expire in the near future and is not expected to be renewed; (ii) substantive
expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted
nor planned; (iii) exploration for and evaluation of mineral resources in the specific area have not led to the
discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such
activities in the specific area; and (iv) sufficient data exists to indicate that the carrying amount of the mining
claims and deferred exploration costs is unlikely to be recovered in full from successful development or by sale.
Why the matter was determined to be a key audit matter
We considered this a key audit matter due to (i) the significance of the exploration and evaluation assets balance
and (ii) the judgments made by management in its assessment of indicators of impairment related to exploration
and evaluation assets, which have resulted in a high degree of subjectivity in performing audit procedures related
to these judgments applied by management.
How the matter was addressed in our audit
We have evaluated management’s assessment of impairment indicators per IFRS 6 Exploration for and
Evaluation of Mineral Resources, including but not limited to:
- Reviewing the Group’s rights to explore in the relevant exploration areas and assessing whether the rights to
tenure remained current at balance date;
- Considering the status of the relevant exploration areas by holding discussions with management, and
reviewing the Group’s exploration plan and directors’ minutes;
- Assessing whether any data exists to suggest that the carrying value of the exploration and evaluation assets is
unlikely to be recovered through development or sale; and
- Assessing the adequacy of the related disclosures in Note 2 and Note 3 of the consolidated financial
statements.
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 auditors' 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 auditors' report. We have nothing to report in this regard.
30 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.
Auditors' 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 auditors' 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 auditors' 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 auditors' 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.
31 •
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
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 auditors' report is Diana Huang.
"Crowe MacKay LLP"
Chartered Professional Accountants
Vancouver, Canada
May 1, 2023
32 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 9)
Short-term lease liability (note 6)
Notes payable (notes 5 and 9)
Total Current Liabilities
Long-term lease liability (note 6)
Total Liabilities
SHAREHOLDERS' EQUITY
Share capital (note 7)
Contributed surplus (note 7)
Commitment to issue shares
Foreign translation reserve
Deficit
Total Equity
Total Liabilities and Equity
December 31
2022
December 31
2021
$ 40,049
57,767
97,816
5,572,595
137,882
$5,808,293
$ 1,057,599
4,664
1,606,046
2,668,309
10,950
2,679,259
50,944,960
12,198,392
95,068
(6,939,102)
(53,170,284)
3,129,034
$5,808,293
$ 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
Nature of operations and going concern (note 1)
Commitments and contingencies (note 12)
Subsequent events (notes 5 and 15)
See accompanying notes to the consolidated financial statements.
APPROVED ON BEHALF OF THE BOARD OF DIRECTORS
Jonathan R. Kelafant
Chairman, Audit Committee
James M. Bruchs
Chairman & CEO
33 Tsodilo Resources Limited
Consolidated Statements of Operations and Comprehensive Income (Loss)
(In United States dollars)
Year Ended December 31
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 (note 3)
Other income, net of cost
Interest income
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
2022
2021
$ 496,162
$ 546,308
1,742
23,773
86,879
42,427
230,968
335,950
1,217,901
(876,351)
75,955
--
(1,421)
(801,817)
(2,019,718)
(528,864)
(528,864)
($ 2,548,582)
--
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)
Basic and diluted loss per share
($0.04)
($0.03)
Weighted average number of shares outstanding
49,658,622
48,994,653
See accompanying notes to the consolidated financial statements.
34
Tsodilo Resources Limited
Consolidated Statements of Changes in Shareholders’ Equity
(In United States dollars except for shares)
2022
Share Capital
Contributed Surplus
Shares Issued Amount
Stock-based
compensation &
Other
Commitment
to issue
shares
Foreign
Translation
Reserve
Deficit
Total
Equity
Balance January 1, 2022
Options exercised
Commitment to issue shares
Stock-based compensation
Comprehensive loss
49,499,581 $50,896,526
48,434
--
--
--
337,500
--
--
--
$11,881,374
(18,932)
--
335,950
--
$--
--
95,068
--
--
($6,410,238)
--
--
--
(528,864)
($51,150,566)
--
--
--
(2,019,718)
$5,217,096
29,502
95,068
335,950
(2,548,582)
Balance December 31,
2022
49,837,081 $50,944,960
$12,198,392
$95,068
($6,939,102)
($ 53,170,284)
$3,129,034
See accompanying notes to the consolidated financial statements.
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) $5,499,997
1,151,821
--
79,817
--
100,091
--
288,377
--
(1,903,007)
(1,316,206)
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.
35
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
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
Additions to plant, property & equipment
Financing Activities
Issuance (payment) of notes payable
Issuance of common shares and warrants - cash
Commitment to issue shares
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
Supplemental cash flow information – note 14
See accompanying notes to the consolidated financial statements.
Years Ended December 31
2022
2021
($2,019,718)
($1,316,206)
876,351
1,858
1,421
335,950
(804,138)
832,943
28,805
(128,488)
--
(128,488)
25,000
--
95,068
--
22,575
(6,203)
136,440
(1,421)
35,336
4,713
$ 40,049
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
36
Tsodilo Resources Limited
Notes to the Consolidated Financial Statements
For the Years ended December 31, 2022 and 2021
(All amounts are in U.S. dollars unless otherwise noted)
1. NATURE OF OPERATIONS AND GOING CONCERN
Tsodilo Resources Limited (“Tsodilo” or “the Company”) is an exploration stage company which is engaged
principally in the acquisition, exploration and development of mineral properties in the Republic of Botswana.
The 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 1 King Street West, 48th Floor, Toronto, Ontario, Canada, M5H
1A1. 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. 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 Toronto Stock Exchange Venture Exchange (“TSX Venture”) under the symbol
“TSD.V.”
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 ($2,019,718) and comprehensive loss of ($2,548,582) during the
year ended December 31, 2022 and as of that date, the Company had an accumulated deficit of $53,170,284 and
negative working capital of ($2,570,493). 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
37
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 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 1, 2023.
(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]
2022
100%
100%
100%
100%
70%
2021
100%
100%
100%
100%
70%
The accounting policies set out below have been applied consistently to all periods and years presented.
38
(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 policies and reporting amounts of
assets and liabilities, income and expenses. Actual results may differ from these estimates.
Significant judgments are required with respect to the assessment of impairment of the Company’s
exploration and evaluation assets, the determination of the functional currency of the Company and its
subsidiaries, 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 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.
Exploration and evaluation assets are tested for impairment if facts or circumstances indicate that
impairment exists. Examples of such facts and circumstances are as follows:
-
the period for which the Company has the right to explore in the specific area has expired during the
39
period or will expire in the near future, and is not expected to be renewed;
-
-
-
substantive expenditure on further exploration for and evaluation of mineral resources in the specific
area is neither budgeted nor planned;
exploration for and evaluation of mineral resources in the specific area have not led to the discovery
of commercially viable quantities of mineral resources and the entity has decided to discontinue
such activities in the specific area; and
sufficient data exists to indicate that, although a development in the specific area is likely to
proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in
full from successful development or by sale.
(f) Property, Plant and Equipment
Property, plant and equipment are 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.
Where an item of property, plant and equipment comprises major components with different useful lives,
the components are accounted for as separate items of property, 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
(”TRBL”)
U.S. Dollar
Gcwihaba Resources (Pty) Limited
(“Gcwihaba”)
Botswana Pula
Newdico (Pty) Limited
Bosoto (Pty) Limited
Idada Trading 361 (Pty) Ltd
(“Newdico”)
Botswana Pula
(“Bosoto”’)
("‘Idada”)
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,
40
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 reallocated to profit or 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.
(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 stock
option. When options are forfeited 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. When an award expires unexercised the
fair value originally allocated to the aware remains in contributed surplus.
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.
41
(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
initially recorded at fair value and designated upon inception into
Under IFRS 9, all financial assets are
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.
The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at
amortized cost. At each reporting date, the Company measures the loss allowance for the financial asset at an
amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased
significantly since initial recognition. If at the reporting date, the financial asset has not increased significantly
since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal
to the twelve-month expected credit losses. The Company shall recognize in profit or loss, as an impairment
gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at
the reporting date to the amount that is required to be recognized.
The Company derecognizes financial assets only when the contractual rights to cash flows from the financial
assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards
of ownership to another entity. Gains and losses on derecognition are recognized in profit or loss.
(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, lease
liability, 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.
The Company derecognizes a financial liability when its contractual obligations are discharged or canceled, or
expire. The Company also derecognizes a financial liability when its terms are modified and the cash flows of
the modified liability are substantially different. In this case, a new financial liability based on the modified
terms is recognized at fair value.
42
(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 year. For an asset that 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 assessed for impairment indicators under IFRS 6.
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 issue costs 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
43
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, 2022 and 2021, 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.
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, 2023 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.
Amendments to IAS 1 and IFRS Practice Statement 2 – Disclosure of Accounting Policies
These amendments continue the IASB's clarifications on applying the concept of materiality. These
amendments help companies provide useful accounting policy disclosures, and they include: requiring
companies to disclose their material accounting policies instead of their significant accounting policies;
clarifying that accounting policies related to immaterial transactions, other events or conditions are
themselves immaterial and do not need to be disclosed; and clarifying that not all accounting policies that
relate to material transactions, other events or conditions are themselves material. The IASB also amended
IFRS Practice Statement 2 to include guidance and examples on applying materiality to accounting policy
disclosures. These amendments are effective for reporting periods beginning on or after January 1, 2023.
Amendments to IAS 8 – Definition of Accounting Estimates
These amendments clarify how companies distinguish changes in accounting policies from changes in
accounting estimates, with a primary focus on the definition of and clarifications on accounting estimates.
The distinction between the two is important because changes in accounting policies are applied
44
in accounting estimates are applied prospectively. Further, the
retrospectively, whereas changes
amendments clarify that accounting estimates are monetary amounts in the financial statements subject to
measurement uncertainty. The amendments also clarify the relationship between accounting policies and
accounting estimates by specifying that a company develops an accounting estimate to achieve the
objective set out by an accounting policy. These amendments are effective for reporting periods 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,
2020
Additions
Net Exchange Differences
Impairment
Balance at December 31,
2021
Impairment
Balance at December 31,
2022
$3,759,919
80,889
(273,284)
$671,771 $4,431,690
128,625
(355,395)
47,736
(82,111)
$141,691
115,380
(17,366)
$7,792 $2,482,154 $7,063,327
332,484
88,479
(572,756)
(199,853)
--
(142)
--
--
--
--
(7,650)
(1,623)
(9,273)
3,567,524
637,396
4,204,920
239,705
Additions
33,573
13,169
46,742
64,150
Net Exchange Differences
(270,608)
(65,892)
(336,500)
(12,177)
--
(584,673)
(584,673)
(291,678)
--
--
--
--
2,369,157
6,813,782
75,877
186,769
(202,928)
(551,605)
--
(876,351)
$3,330,489
$ -- $3,330,489
$ --
$ -- $2,242,106 $5,572,595
Exploration and evaluation additions for the year-ended December 31, 2022 are summarized as follows:
Bosoto Botswana
Project
BK 16
Precious
Stones
Project
PL 217
Precious
Stones
Bosoto
Total
Newdico
Botswana
Project
PL091
Industrial
Minerals
Gcwihaba
Botswana
Metals
TOTAL
Drilling Expenditures
$ 2,180
$ 147
$ 2,327
$ 457
$ 8,149
$10,933
Amortization Drill Rigs, Vehicles & Trucks
4,022
Geophysics
Lab Analyses & Assays
License Fees
150
837
80
--
150
--
117
300
837
197
Maintenance, & Consumables
Salaries, Wages & Services
8,849
17,455
6,446
6,309
15,295
23,764
--
--
150
6,385
7,787
4,887
22,346
19,157
820
6,704
13,814
58,280
22,646
19,994
1,167
28,384
45,365
4,022
49,371
Balance at December 31, 2022
$33,573
$13,169
$46,742
$64,150
$75,877
$186,769
45
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
Gcwihaba
Botswana
Metals
Newdico
Botswana
Project
PL091
Industrial
Minerals
TOTAL
Drilling Expenditures
$ 5,175
$ 64
$ 5,239
$ 265
$ 10,676
$16,180
Amortization Drill Rigs, Vehicles & Trucks
Geophysics
Lab Analyses & Assays
License Fees
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
54,980
2,898
--
119
6,239
50,879
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
$47,736 $128,625
$115,380
$88,479
$332,484
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.
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 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
46
in renewal. The 21 licenses were relinquished 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 of 2021 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 had
no 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 ($619,438 USD as at December 31, 2022. The fifth license is currently the subject of litigation, see note 13 for a
summary description.
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.
PL 217/2016 was acquired in the second quarter of 2017. The license had 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 to be
effective July 1, 2020.
A review of the Company’s extensive exploration work on PL217/2016 was performed in the fourth quarter and it
was determined that there is not enough gravel tonnage to make an economic project. Accordingly, one of the
two the licenses were relinquished in its entirety in the 4th quarter. The Company has written off the capitalized
cost of $584,673 as impaired for that one license as at the year-ended December 31, 2022.
Newdico (Pty) Ltd (“Newdico”) - Botswana
The Company holds a 100% interest in Newdico, which held one (1) industrial mineral (granite & dolerite) license.
In the 4th quarter, a review of available data indicated that it is uneconomical to exploit. The Company decided to
relinquish the license in its entirety. The Company has written off the capitalized costs of $291,678 as impaired as
at the year-ended December 31, 2022.
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. The Prospecting Right
was subsequently granted for a term of five years effective as of May 2015.
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. As a result the Company was not granted a renewal of its
exploration license.
The license comprises 9,033 hectares and all expenditures were 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
47
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 program 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.
4. PROPERTY, PLANT, AND EQUIPMENT
Cost
Hangar
Vehicles
Furniture and
Equipment
Right of
Use Asset
Total
As at December 31, 2020
$183,140
$ 802,513
Additions
--
--
Foreign Exchange Difference
(14,400)
(63,100)
As at December 31, 2021
Foreign exchange Difference
As at December 31, 2022
168,740
(14,260)
$154,480
739,413
(62,487)
$676,926
$ 440,968
18,833
(33,305)
426,496
(34,572)
$391,924
27,211
(1,468)
25,743
(2,176)
$23,567
$--
$ 1,426,621
Accumulated Depreciation
As at December 31, 2020
Depreciation
Foreign exchange Difference
As at December 31, 2021
Depreciation
Foreign Exchange Difference
Hangar
Vehicles
Furniture and
Equipment
Right of
Use Asset
$81,343
19,734
(3,315)
97,762
17,633
(5,008)
$789,465
5,321
(62,386)
732,400
4,755
(62,063)
$307,727
34,697
(29,352)
313,072
31,005
(29,968)
$--
5,149
--
5,149
4,887
(609)
As at December 31, 2022
$110,387
$675,092
$314,109
$9,427
$1,109,015
Net book value
As at December 31, 2021
$70,978
$7,013
$113,424
$20,594
$212,009
As at December 31, 2022
$44,093
$1,834
$77,815
$14,140
$137,882
For the year ended December 31, 2022, $58,280 (2021: $64,901) in depreciation has been capitalized under
exploration properties.
46,044
(112,273)
1,360,392
(113,495)
$1,246,897
Total
$1,178,535
64,901
(95,053)
1,148,383
58,280
(97,648)
48
5. NOTES PAYABLE
As at December 31, 2022, notes payable in the amount of $1,606,046 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. In addition,
at the option of the note holder, the December 2018 note 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 at the
price of the private placement. The remaining notes are due on demand.
The notes payable at December 31, 2022 are summarized as follows:
Date
Balance
12/31/2021
Changes
in 2022
Balance
12/31/2022
Interest Rate
Termination
Fee
Maturity
Date
31-Dec-18
30-Jun-19
31-Dec-19
01-Oct-20
21-Jun-21
27-Jul-21
28-Aug-21
27-Sep-21
31-Dec-21
30-Jun-22
21-Sep-22
30-Sep-22
31-Dec-22
$273,006
$--
$273,006
207,242
57,684
192,042
26,500
26,500
27,000
25,500
102,235
--
--
--
--
--
--
--
--
--
--
--
--
451,159
25,000
100,738
91,440
207,242
57,684
192,042
26,500
26,500
27,000
25,500
102,235
451,159
25,000
100,738
91,440
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
$27,300
31-Dec-23*
NIL On Demand
NIL On Demand
NIL On Demand
NIL On Demand
NIL On Demand
NIL On Demand
NIL On Demand
NIL On Demand
NIL On Demand
NIL
19-Dec-22**
NIL On Demand
NIL On Demand
Total
$937,709 $668,337
$1,606,046
$27,300
*During the year-ended December 31, 2022, $273,006 of notes payable had its maturity extended from
December 31, 2022 to December 31, 2023.
** The promissory note of $25,000 dated September 21, 2022 has been repaid subsequent to year end.
On June 30, 2022, a promissory note was issued for $451,159 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 21, 2022, a promissory note was issued for $25,000. The note matured on December 19,
2022 and has an annual interest rate of 8%.
On September 30, 2022, a promissory note was issued for $100,738 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, 2022, a promissory note was issued for $91,440 to an employee, who is a director of
the Company. The note is payable on demand and has an annual interest rate of 8%.
49 The notes payable at December 31, 2021 are summarized as follows:
Date
Balance
12/31/2020
Changes
in 2021
Balance
12/31/2021
Interest Rate
Termination
Fee
Maturity
Date
1-Oct-18
31-Dec-18
31-Jan-19
30-Jun-19
30-Sep-19
31-Dec-19
01-Oct-20
21-Jun-21
27-Jul-21
28-Aug-21
27-Sep-21
$5,819
($5,819)
347,579
(74,573)
85,000
(85,000)
$--
273,006
--
293,687
(86,445)
207,242
36,462
95,146
192,042
--
--
--
--
(36,462)
(37,462)
--
26,500
26,500
27,000
25,500
--
57,684
192,042
26,500
26,500
27,000
25,500
102,235
$937,709
31-Dec-21
102,235
Total $1,055,735 ($118,026)
--
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
$--
--
27,300
31-Dec-22*
--
--
NIL On Demand
--
--
NIL On Demand
NIL On Demand
NIL On Demand
NIL On Demand
NIL On Demand
NIL On Demand
NIL 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%.
6. LEASE LIABILITY
Lease liability opening balance
Additions
Payments
Accretion
Exchange difference
Lease liability ending balance
Less current portion
Long-term portion
December 31
2022
$ 21,633
--
(6,203)
1,858
(1,674)
15,614
(4,664)
$ 10,950
2021
$ --
27,211
(6,870)
2,526
(1,234)
21,633
(4,578)
$ 17,055
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%. No other lease liability
activity occurred during the year ended December 31, 2022.
50
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: 49,837,081 Common Shares as at December 31, 2022 and 49,499,581 at December 31,
2021.
1)
Issued during the year ended December 31, 2022:
On July 12, 2022, 237,500 (C$0.09) options were exercised for proceeds of $16,452 (C$21,375). The fair
value of $10,206 (C$13,276) was reclassified from contributed surplus to share capital.
On July 12, 2022, 100,000 (C$0.17) options were exercised for proceeds of $13,050 (C$17,000). The fair
value of $8,726 (C$11,350) was reclassified from contributed surplus to share capital.
2)
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 $21,001.
On December 31, 2021, 115,500 options were exercised for proceeds of $45,680 (C$58,375). The fair
value of $27,365 (C$40,245) was reclassified from contributed surplus to share capital.
(b)Warrants
As at December 31, 2021 and 2022, the following warrants were outstanding:
Expiry
Exercise
price (USD)
Warrants
outstanding
July 25, 2023*
August 10, 2023*
$0.55
$0.55
$0.55
2,504,055
300,000
2,804,055
Remaining
contractual
life (years)
0.56
0.61
0.57
*During the year-ended December 31, 2022, the expiry of the options has been extended from January 25,
2023 and February 10, 2023 to July 25, 2023 and August 10, 2023.
Outstanding as at December 31, 2020
Issued
Exercised
Outstanding as at December 31, 2021 and 2022
Number of Warrants Weighted Average
Exercise Price
--
2,986,038
(181,983)
2,804,055
--
$0.55
$0.55
$0.55
51
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 $21,001.
No warrants were issued, exercised or expired during the year ended December 31, 2022.
(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
TSX Venture 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. 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.
The following Table summarizes the Company’s stock option activity for the years ended December 31, 2022 and
2021:
Outstanding as at December 31, 2020
Granted
Exercised
Expired
Outstanding as at December 31, 2021
Granted
Exercised
Expired
Outstanding as at December 31, 2022
Number of Options Weighted Average
Exercise Price
2,706,250
925,000
(165,500)
(425,000)
3,040,750
1,425,000
(337,500)
(547,000)
3,581,250
C$0.48
C$0.67
C$0.61
C$0.76
C$0.49
C$0.39
C$0.12
C$0.80
C$0.43
2022
On January 1, 2022, the company granted 425,000 options at C$0.64.
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.
On July 1, 2022, the company granted 1,000,000 options at C$0.29.
On July 12, 2022, 237,500 (C$0.09) options were exercised for proceeds of $16,452 (C$21,375).
On July 12, 2022, 100,000 (C$0.17) options were exercised for proceeds of $13,050 (C$17,000).
On November 21, 2022, 72,000 stock options exercisable at C$0.75 expired.
52
2021
On January 4, 2021, 175,000 stock options exercisable at C$0.72 expired.
On January 1, 2021, the Company granted 275,000 options at C$0.47.
On April 8, 2021, 250,000 stock options exercisable at C$0.79 expired.
On May 20, 2021, the Company granted 650,000 options at C$0.75.
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 options exercisable at C$0.09 were exercised.
On December 31, 2021, 50,000 options exercisable at C$0.69 were exercised.
On December 31, 2021, 28,000 options exercisable at C$0.75 were exercised.
The weighted average trading price of the Company's shares on the dates of the exercises of stock options was
C$0.70 (2021 - C$0.71) for the year ended December 31, 2022.
The following assumptions were used in the Black Scholes option pricing model to fair value the stock
options granted during the years ended December 31, 2022 and 2021:
Expected lives
2022
2021
3.95 years
3.97 years
Expected volatilities (based on Company’s historical prices)
113.56-116.22%
103.6-109.7%
Expected dividend yield
Risk free rates
Weighted average fair value of option
0%
0%
1.11-2.84%
0.26-0.58%
$0.30
$0.49
The following table summarizes stock options outstanding as at December 31, 2022:
Options Outstanding
Options Exercisable
Exercise
Price (C$)
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$0.65
C$0.55
C$0.28
C$0.17
C$0.07
C$0.09
C$0.47
C$0.75
C$0.64
C$0.29
175,000
450,000
50,000
375,000
162,500
118,750
275,000
550,000
425,000
1,000,00
0
3,581,250
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$0.64
C$0.29
C$0.43
0.01
0.23
1.00
1.43
2.01
2.72
3.00
3.39
4.00
4.50
2.85
175,000
450,000
50,000
375,000
162,500
118,750
275,000
550,000
212,500
250,000
2,618,750
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$0.64
C$0.29
C$0.44
0.01
0.23
1.00
1.43
2.01
2.72
3.00
3.39
4.00
4.50
2.31
53
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 2022 of approximately 27% (2021: 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, 2022 December 31, 2021
($2,019,718)
($1,316,206)
27.00%
($545,324)
50,135
78,807
416,382
$ --
27.00%
($355,376)
4,420
76,654
274,302
$ --
As of December 31, 2022, 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, 2022 December 31, 2021
($19,000)
(2,066,000)
(2,085,000)
2,085,000
$--
($24,000)
(2,424,000)
(2,448,000)
2,448,000
$--
As at December 31, 2022, the Company has unrecognized deductible temporary differences aggregating to
$14,434,000 (2021: $13,082,000), 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, 2022
$4,812,000
9,263,000
359,000
December 31, 2021
$4,232,000
8,435,000
415,000
$14,434,000
$13,082,000
The Canadian tax losses of $9,263,000 (2021: $8,435,000) expire from 2026 through to 2042. The majority of
Botswana tax losses can be carried forward indefinitely with the remainder expiring within five years.
54
9. 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
For the year ended
December 31
2022
2021
$333,333
238,221
$571,554
$298,000
270,792
$568,792
During the year, an individual related to the CEO provided administrative and management services to
the Company and was remunerated in 2022 in the amount of $48,000 (2021: $48,000).
During the year, an individual related to key management personnel of the Company received $NIL in
stock-based compensation during the year (2021: $5,970).
During the year, a board member was issued notes in the amount of $643,337 (2021: $207,736).
As at December 31, 2022, there was a total of $26,852 (2021: $112,611) payables to related parties
included within accounts payable and accrued liabilities. The amounts are unsecured, non-interest
bearing and are due on demand.
There are no other related party transactions.
10. SEGMENTED INFORMATION
The Company is operating in one industry. As at December 31, 2022 the Company’s property, plant and
equipment in Botswana was $137,882 (2021: $212,009) and exploration and evaluations properties in Botswana
were $5,572,595 (2021: $6,813,782).
11. FINANCIAL INSTRUMENTS
The Company’s financial instruments include cash, accounts receivable, accounts payable and accrued liabilities,
lease liabilities and notes payable.
The fair value of financial instruments is determined by valuation methods depending on hierarchy levels as
defined below:
1.
2.
3.
Level 1 of the fair value hierarchy includes unadjusted quoted prices in active markets for identical assets
or liabilities;
Level 2 of the hierarchy includes inputs that are observable for the asset or liability, either directly or
indirectly; and
Level 3 includes inputs for the asset or liability that are not based on observable market data.
The Company has no financial instruments measured at fair value.
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
55
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.
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 2022. 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 $2,570,493 at
December 31, 2022 (2021: $1,791,640).
(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 cash balances. The
Company limits exposure to credit risk 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.
(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 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 working capital balances due to changes in
the USD/BWP exchange rate. Based on the net Pula denominated financial instruments exposures as at
December 31, 2022, a ten percentage change in the exchange rate would result in approximately a $36,444 [2021:
($84,000)] 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.
12. 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.
The Company has mineral interest commitments with its Bosoto and Gcwihaba licenses. The Company is to make
exploration expenditures of approximately $3,089,586 (40,002,000 BWP) by September 30, 2023 on its
PL369/2014 Bosoto license and approximately $619,438 (8,020,080 BWP) by December 31, 2023 on its Gcwihaba
licenses.
56
Lease & Service Commitments
Currently, the aggregate minimum annual payments are as follows:
Year
Facility
Term
BWP
2023
2023
2023
2023
Hangar Maun1 2/01/2016 – 12/31/2026
Shakawe Plot2 1/01/2021 – 12/31/2025
2/01/2022 – 1/31/2023
Letlhakane Plot4 2/21/2018 – 12/31/2068
Gaborone3
Total
Yearly Rental Services
24,527
-
98,000
-
163,512
77,880
-
29,998
Total
188,039
77,880
98,000
29,998
USD*
$14,523
6,015
7,570
2,317
$30,425
*aggregate costs converted at January 1 of the current calendar year
1 Newdico 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. As at February 1,
2023, the monthly lease payment is 13,710 BWP / month in addition to a fee of 15% of monthly rental for
security and general maintenance at the airport complex.
2 The 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 6,490 BWP increasing 420 BWP
annually in each successive year.
3 The twelve month service agreement has an effective date of February 1, 2023 and is renewable at the
company’s option for an additional year expiring January 31, 2024. The monthly lease payment is 8,000
BWP/month.
4 The 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.
13. Litigation
On or about June 30, 2021, the Company's wholly owned Botswana subsidiary, Gcwihaba Resources (Pty) Ltd.
(Gcwihaba) submitted prospecting renewal license applications for its Xaudum Iron Formation project in
northwest Botswana. Of the then current 7 licenses, two licenses were relinquished in their entirety and 5 were
submitted for renewal. Collectively 50% of the combined license area in the 7 licenses was relinquished pursuant
to Section(s) 17 and 19 of the Mines and Minerals Act.
Four of the five licenses were renewed as submitted, effective January 1, 2022, while the fifth license, PL020/2018,
continued in renewal. It was determined that the license remaining up for renewal is in the buffer zone
surrounding the Okavango Delta, a UNESCO World Heritage Property, and that any prospecting activities in that
area would be subject to environmental assessment measures.
The Minister of Minerals and Energy informed Gcwihaba that the license would not be renewed if it included any
areas located within the buffer zone. The Company has filed a renewed application and has initiated litigation in
the belief that no laws or regulations have been broken and that the license should be renewed. Litigation is
underway and the outcome of litigation cannot be known at this time.
57 14. NOTES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS
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
lliabilitiliabilitiedliabilities
Issuance of common shares for notes payable
Reclassification of accounts payable to notes payable
Lease assets acquired
Fair value of options exercised
15. SUBSEQUENT EVENTS
On January 1, 2023, the company granted 650,000 options exercisable at C$0.20.
On January 2, 2023, 175,000 stock options exercisable at C$0.65 expired.
On March 25, 2023, 450,000 stock options exercisable at C$0.55 expired.
For the year ended
December 31
2022
2021
($ 27,065)
$ 24,593
216,671
643,337
277,010
229,287
$832,943
$530,890
$ 6,927
$ --
$ 228,449
$ 295,616
$ 643,337
$ (207,735)
$ --
$ 18,932
$ 27,211
$ --
On January 25, 2023, 2,500,941 units were issued at a price of C$0.20 for proceeds to the Company of $368,394
(C$500,188). 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, 2025 at USD $0.20.
58
Corporate Information
DIRECTORS
James M. Bruchs, Chairman
McLean, Virginia
Appointed as director in 2002
Jonathan R. Kelafant
Lexington, 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
Bettina Bruchs, M.A.
Corporate Secretary
Appointed in 2018
CORPORATE HEAD OFFICE
1 King Street West, 48th Floor
Toronto, ON M5H 1A1
Canada
Telephone: (416) 800-4214
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 LISTINGS
TSX Venture Exchange
Trading Symbol: TSD
OTCQB (US)
Trading Symbol: TSDRF
Frankfurt Stock Exchange
Trading Symbol TZO
-bc-