Ivanhoe Electric Inc. 10-Q

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion and analysis of our financial condition and results of operations together with the condensed interim consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q (this “Quarterly Report”) and with our audited consolidated financial statements and the related notes for the fiscal year ended December 31, 2024 included in Part II of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2025 (the “2024 Form 10-K”). S pecial Note Regarding Forward-Looking Statements This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"), that involve risks and uncertainties, including statements based on our current expectations, assumptions, estimates and projections about future events, our business, our financial condition, results of operations and prospects, our industry and the regulatory environment in which we operate. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. Those statements include, but are not limited to, statements with respect to: estimated calculations of mineral reserves and resources at our properties including changes in those estimated calculations, anticipated results and timing of exploration activities, timing of studies for advancing or developing our properties, plans and objectives, industry trends, our requirements for additional capital, treatment under applicable government regimes for permitting or attaining approvals, government regulation, environmental risks, title disputes or claims, synergies of potential future acquisitions, the projected, forecast or anticipated economic parameters of our mineral projects (including capital cost, operating cost, net present value, internal rate of return and other parameters), and our anticipated uses of the net proceeds from our initial public offering or other offerings of our securities. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “could,” “should,” “would,” “achieve,” “budget,” “scheduled,” “forecasts,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our industry. All forward-looking statements speak only as of the date on which they are made. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions concerning future events that are difficult to predict. Therefore, actual future events or results may differ materially from these statements. We believe that the factors that could cause our actual results to differ materially from those expressed or implied by forward-looking statements include the following: our mineral projects are all at the exploration stage and are subject to the significant risks and uncertainties associated with mineral exploration; the initial assessment for our Santa Cruz Project is only an early stage study of its potential economic viability and future studies and actual economic outcomes may vary greatly from those set forth in the initial assessment; we have no mineral reserves, other than at the Alacran project; we have a limited operating history on which to base an evaluation of our business and prospects; we depend on our material projects for our future operations; our mineral resource and reserve calculations and economic projections relating to our properties are only estimates; actual capital costs, operating costs, production and economic returns at any future mine may differ significantly from those we have anticipated or projected; the title to some of the mineral properties may be uncertain or defective; our business is subject to changes in the prices of copper, gold, silver, nickel, cobalt, vanadium and platinum group metals; we have claims and legal proceedings against one of our subsidiaries; our business is subject to significant risk and hazards associated with future mining operations; we may fail to identify attractive acquisition candidates or joint ventures with strategic partners or be unable to successfully integrate acquired mineral properties; we may fail to successfully manage joint ventures and are reliant on our joint venture partners to comply with their obligations; our business is extensively regulated by the United States and foreign governments as well as local governments; the requirements that we obtain, maintain and renew environmental, construction and mining permits are often a costly and time-consuming process; our non-U.S. operations are subject to additional political, economic and other uncertainties not generally associated with domestic operations; and our activities may be hindered, delayed or have to cease as a result of climate change effects, including increased and excessive heating, the potential for forest fires at many of our properties and our ability to establish a United States-based vanadium redox battery business. You should carefully consider these risks, as well as the additional risks described in other documents we file with the SEC. We also operate in a very competitive and rapidly changing industry. New risks emerge from time to time and it is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in, or implied by, any forward-looking statements . 15 These factors should not be construed as exhaustive and should be read in conjunction with the risks described under the heading “Risk Factors” in our 2024 Form 10-K. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under “Risk Factors” in the 2024 Form 10-K. These risks and uncertainties, as well as other risks of which we are not aware or which we currently do not believe to be material, may cause our actual future results to be materially different than those expressed in our forward-looking statements. We caution you not to place undue reliance on these forward-looking statements. We do not undertake any obligation to make any revisions to these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as required by law. Business Overview We are a United States domiciled minerals exploration company with a focus on developing mines from mineral deposits principally located in the United States. We seek to support American supply chain independence by finding and delivering the critical metals necessary for electrification of the economy, with a focus on copper. We use our accurate and powerful Typhoon™ geophysical surveying system, together with advanced data analytics provided by our 94.3% owned subsidiary, Computational Geosciences Inc. (“CGI”), to accelerate and de-risk the mineral exploration process as we seek to discover new deposits of critical metals that may otherwise be undetectable by traditional exploration technologies. We believe the United States is significantly underexplored and has the potential to yield major new discoveries of critical metals. Our mineral exploration efforts focus on copper as well as other metals including nickel, vanadium, cobalt, platinum group elements, gold and silver. Through the advancement of our portfolio of electric metals exploration projects, headlined by the Santa Cruz Project in Arizona as well as other exploration projects in the United States, we intend to support the United States' supply chain independence by finding and delivering critical metals necessary for the electrification of the economy. We also operate a 50/50 joint venture with Saudi Arabian Mining Company Ma’aden ("Ma'aden") to explore for minerals on ~48,500 km 2 of underexplored Arabian Shield in Saudi Arabia. Finally, in addition to our mineral projects, we also own a 90.0% controlling interest in VRB Energy Inc. (“VRB”) which itself owns 100% of VRB Energy USA Inc., an Arizona-based developer of advanced grid-scale energy storage systems utilizing vanadium redox flow batteries for integration with renewable power sources. VRB also has a 49% interest in VRB China which is a joint venture with a subsidiary of privately held Shanxi Red Sun Co., Ltd. VRB China manufactures, develops and sells vanadium redox flow batteries for Asian, African and Middle Eastern markets. At our Santa Cruz Project in Arizona, we are evaluating the potential for a high-grade modern underground copper mining operation. The Initial Assessment for the Santa Cruz Project, completed in September 2023, focuses on an underground copper mine with an average of 5.5 million tonnes mined annually, exclusively from the high-grade exotic, oxide and enriched domains of the Santa Cruz and East Ridge Deposits. The Initial Assessment estimates life of mine copper production of 1.6 million tonnes over a 20-year mine life, with projected cash costs of $1.36 per pound of copper produced. We are advancing environmental, technical, trade-off and economic studies in preparation for a preliminary feasibility study for a copper mining operation incorporating leading technologies to improve efficiencies and costs. We are designing a technologically advanced mine that we expect to result in low carbon dioxide emissions per pound of copper produced and be a leading example of responsibly produced domestic copper. Our other mineral projects in the United States include the Tintic Project, located in Utah, and the Hog Heaven Copper-Silver-Gold Project, located in Montana. We also hold a portfolio of exploration projects in the western United States, including projects in Arizona, Nevada, New Mexico and Montana. References to our mineral projects refers to our interests in such projects which may be a direct ownership interest in mineral titles (including through subsidiary entities), a right to acquire mineral titles through an earn-in or option agreement, or, in the case of our investments in publicly listed companies in Canada, through our ownership of the equity of those companies that have an interest in such mineral projects. Our shares of common stock are listed on the NYSE American and the TSX under the ticker symbol “IE”. Business Developments in the Quarter On February 14, 2025, we completed a public offering where we issued 11,794,872 units (the “Units”) at a price of $5.85 per Unit for net proceeds of approximately $66.0 million, after giving effect to the underwriter’s exercise in full of its option to purchase additional Units. Each Unit consists of (i) one share of our common stock and (ii) one accompanying warrant (the "Warrants"). Each of the currently outstanding 11,794,872 whole Warrants is exercisable to purchase one share of our common stock at a price of $7.00 per share until February 17, 2026. We intend to use the net proceeds of the offering on the preliminary feasibility study for the Santa Cruz Project, land acquisition payments, drilling and other exploration activities and for other working capital and general corporate purposes. 16 Segments We account for our business in four business segments – (i) Santa Cruz Project (ii) critical metals, (iii) data processing services and (iv) energy storage. Significant Components of Results of Operations Revenue, Cost of Sales and Gross Profit We have not generated any revenue from our mining projects because they are in the exploration stage. We do not expect to generate any revenue from our mining projects for the foreseeable future. We generate some revenue from our technology businesses CGI and VRB, which are included in the data processing and energy storage systems business segments, respectively. CGI generates revenue from the sale of data processing services to the mining and oil and gas industries. In prior years, CGI has also generated revenue from software licensing. VRB generates revenue from developing, manufacturing and selling vanadium redox flow energy storage systems. Exploration Expenses Exploration expenses include topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling and activities in relation to identifying a Mineral Resource and then evaluating the technical feasibility and commercial viability of extracting the Mineral Resource, as well as value-added taxes in relation to these direct exploration and evaluation costs incurred in foreign jurisdictions where recoverability of those taxes is uncertain. Exploration expenses also include salaries, benefits and non-cash stock-based compensation expenses of the employees performing these activities. Exploration expenses also include payments under earn-in and option agreements where the option right is with respect to ownership interests in legal entities owning the underlying mineral project in the exploration project phase. Through our earn-in and option agreements, we have the right (and in some cases, the obligation) to fund and conduct exploration on the underlying mineral project prior to determining whether to acquire a minority or majority ownership interest through further funding the costs of such exploration and, in some cases, through direct payments to the owners of the project. In the event we cease making expenditures on an exploration mineral project or fail to incur the agreed level of exploration expenditures, we will not obtain an ownership right beyond any which may have been acquired as of the date of termination. Included in exploration expenses are exploration costs that we incur in relation to generating new projects. These activities may or may not proceed to earn-in agreements depending on our evaluation. These are categorized as “Project generation and other”. General and Administrative Expenses Our general and administrative expenses consist of salaries and benefits, stock-based compensation, professional and consultant fees, insurance and other general administration costs. Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024 For the three months ended March 31, 2025 we recorded a net loss attributable to common stockholders of $30.5 million ($0.24 per share), compared to $55.5 million ($0.46 per share) for the three months ended March 31, 2024, which was a decrease of $25.0 million. Significant contributors to this decrease for the three months ended March 31, 2025 included a decrease of $27.9 million in exploration expenditures, a decrease of $1.0 million in general and administrative expenses offset by an increase of $2.0 million in the share of loss of equity method investees and an increase of $0.4 million in revenue compared to the three months ended March 31, 2024. 17 Exploration expenses were $15.8 million for the three months ended March 31, 2025, a decrease of $27.9 million from $43.6 million for the three months ended March 31, 2024. Exploration expenses consisted of the following: Three months ended March 31, (In thousands) 2025 2024 Exploration Expenses: Santa Cruz, USA $ 6,504 $ 27,837 San Matias, Colombia (Cordoba) 3,336 3,518 Hog Heaven, USA 873 3,307 Tintic, USA 712 3,520 Project generation and other 4,360 5,461 Total $ 15,785 $ 43,643 During the three months ended March 31, 2025, exploration expenditures largely focused on activities at: • the Santa Cruz Project where $6.5 million of expenditure was incurred in the three months ended March 31, 2025 compared to $27.8 million incurred in the three months ended March 31, 2024. Activities during the three months ended March 31, 2025 at Santa Cruz were focused on the technical engineering studies required to support the preliminary feasibility study which is expected to be completed in June 2025. The exploration expenditures incurred in the three months ended March 31, 2024 were significantly higher due to the activities being focused on infill resource drilling, geotechnical, hydrological, and metallurgical drilling to obtain data for the technical studies; and • the San Matias Project where $3.3 million of expenditure was incurred by Cordoba Minerals for the three months ended March 31, 2025 focused on detailed engineering design of the Alacran mine and consultation associated with the Environmental Impact Assessment process. General and administrative expenses were $11.6 million for the three months ended March 31, 2025, a decrease of $1.0 million from $12.6 million for the three months ended March 31, 2024. Contributing to the decrease was a $0.6 million decrease in administration expenditures at Cordoba Minerals for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 as a result of 2024 including higher consulting fees related to the strategic arrangement with JCHX. Also contributing to this decrease was that the three months ended March 31, 2024 included $0.3 million related to corporate administration costs for Kaizen Discovery which was acquired by us in 2024 and there were no similar expenditures in 2025. Share of loss of equity method investees was $5.0 million for the three months ended March 31, 2025, an increase of $2.0 million from $3.0 million for the three months ended March 31, 2024. The increase in loss was largely due to a $1.6 million increase in our share of the loss from the Ma'aden joint venture which was $3.7 million for the three months ended March 31, 2025 compared to our $2.1 million for the three months ended March 31, 2024 In addition, for the three months ended March 31, 2025 we incurred a $1.3 million share of loss from the VRB China joint venture which was formed in October 2024. CGI’s software licensing and data processing services to the mining and oil and gas industries represented 100% of our revenue for the three months ended March 31, 2025 ($0.7 million) and 100% for the three months ended March 31, 2024 ($0.4 million). VRB generated no revenue during these periods. Three Months Ended March 31, 2025 Three Months Ended March 31, 2024 Percentage Change (In thousands) Software licensing and data processing services: Revenue $ 735 $ 360 104 % Cost of sales (293) (100) 192 % Gross profit $ 442 $ 260 70 % 18 CGI’s revenue for the three months ended March 31, 2025 was $0.7 million, an increase of $0.3 million from $0.4 million for the three months ended March 31, 2024. The increase in CGI’s revenue was a result of more data processing services being performed. CGI’s gross profit for the three months ended March 31, 2025 was $0.4 million, an increase of $0.2 million from $0.3 million for the three months ended March 31, 2024. The percentage increase in CGI's gross profit was consistent with the increase in revenue. Stock-Based Compensation On March 6, 2025, as part of our long term incentive plan the following equity incentives were granted to certain of our officers and employees: • 776,557 stock-settled restricted stock units ("RSU's") that vest in three equal tranches beginning one year from the grant date. The fair value of the stock-settled RSU’s is amortized over the vesting period. The total fair value of the March 6, 2025 RSU grant was $4.5 million. • Performance share units ("PSU's") that vest on December 31, 2027, with the number of units to vest determined by our share price performance against constituents from a Base Metals Index. The number of units to vest ranges between zero times to two times the target number of PSU's. The total target number of PSU's is 714,822. The total fair value of the March 6, 2025 PSU grant was $5.1 million. Liquidity, Capital Resources and Capital Requirements Cash Resources We have recurring net losses and negative operating cash flows and we expect that we will continue to operate at a loss for the foreseeable future. We generate revenue from our technology businesses. We have not generated any revenue from our mining projects and do not expect to generate any revenue from our mining projects for the foreseeable future. We have funded our operations primarily through the sale of our equity securities. At March 31, 2025 and December 31, 2024, we had cash and cash equivalents of $98.2 million and $41.0 million, respectively, and a working capital of $77.1 million and $35.9 million, respectively. Of the total cash and cash equivalents at March 31, 2025 and December 31, 2024, $19.3 million and $11.2 million, respectively, was not available for the general corporate purposes of the Company as these amounts were held by non-wholly-owned subsidiaries. As at May 6, 2025, we believe that we have sufficient cash resources to carry out our business plans for at least the next 12 months, after which we expect to need additional financing to further advance our projects and conduct our business; provided, however, that if we make a development decision at the Santa Cruz Project within the next 12 months, our need for additional financing will be accelerated. We have based these estimates on our current assumptions which may require future adjustments based on our ongoing business and development decisions. Accordingly, we may require additional cash resources earlier than we currently expect or we may need to curtail currently planned activities. Our significant operational expenses include the payments that we anticipate making under the various earn-in and option agreements to which we are a party. These agreements are structured to provide us with flexibility whereby our ability to continue to explore on a mineral project is contingent on funding agreed specified levels over specified time intervals. We may seek additional financing at any time through debt, equity, project specific debt, and/or other means, including asset sales. Our continued operations are dependent on our ability to obtain additional financing or to generate future cash flows. However, there can be no assurance that we will be successful in our efforts to raise additional capital on terms favorable to us, or at all. 19 Consolidated Cash Balances as of March 31, 2025 The table below discloses the amounts of cash disaggregated by currency denomination as of March 31, 2025 in each jurisdiction that our affiliated entities are domiciled. Currency by Denomination (in USD Equivalents) US dollars Canadian Dollars Colombian Pesos Other Total (In thousands) Jurisdiction of Entity: USA $ 75,391 $ 1,002 $ — $ — $ 76,393 Colombia 5,000 — 5,344 — 10,344 Singapore 7,180 — — — 7,180 Canada 425 2,446 — — 2,871 Other 874 230 — 272 1,376 Total $ 88,870 $ 3,677 $ 5,344 $ 272 $ 98,163 Refer to Note 19 of our consolidated financial statements in our 2024 Form 10-K which outlines other restrictions on transfers of net assets from our consolidated subsidiaries to the Company. Note Payable In May 2023, as part of the consideration for the acquisition of 5,975 acres of surface title and associated water rights at the Santa Cruz Project we issued to the vendor a secured promissory note in the principal amount of $82.6 million. The promissory note included an annual interest rate of prime plus 1% and is to be paid in installments. In November 2023, we repaid $34.3 million, plus accrued interest of the promissory note and in November 2024, we repaid $12.1 million, plus accrued interest of the promissory note. Three principal payments of $12.1 million remain to be paid on the second, third and fourth anniversaries of the November 2023 payment, plus applicable accrued interest. Convertible Bond — VRB. In 2021, VRB issued a convertible bond for gross proceeds of $24.0 million. The bond has a five-year term and interest accrues at a rate of 8% per annum. Prior to the maturity date, the convertible bond will be automatically converted into equity of VRB upon an equity financing or sale event, at a price per share equal to the lower of (A) the transaction price of the equity financing or sale event, and (B) the valuation cap price of $158.0 million divided by the total shares outstanding at the time of the event. If no equity financing or sale event occurs, VRB must repay the outstanding principal and interest on maturity. Bridge Loan — Cordoba. In December 2024, Cordoba obtained a $10.0 million bridge loan from JCHX, of which $5.0 million was received in December 2024 and $5.0 million in January 2025. The loan bears simple interest at 10% per annum for the first six months of the agreement, and 12% per annum thereafter. The loan is payable on the maturity date, which is the earlier of 36 months after the date of the loan agreements or the date the third installment of $20.0 million becomes payable by JCHX under the strategic arrangement with Cordoba. 20 Cash Flows The following table presents our sources and uses of cash for the periods indicated: Three Months Ended March 31, 2025 2024 Net cash (used in) provided by: Operating activities $ (15,775) $ (49,959) Investing activities (2) (1,467) Financing activities 70,815 26,000 Effect of foreign exchange on cash 249 (256) Total change in cash $ 55,287 $ (25,682) Operating activities. Net cash used in operating activities for all periods presented largely was spent on our exploration expenses and our general and administrative costs. We do not generate adequate cash from operations to cover our operating expenses and therefore rely on our financing activities to provide the cash resources to fund our operating and investing activities. The net cash used in operating activities during the three months ended March 31, 2025 of $15.8 million primarily was the result of $15.4 million of cash exploration expenditures and $9.0 million of cash general and administrative costs offset by a $7.5 million change in operating assets and liabilities. The $7.5 million change in operating assets and liabilities was mainly a result of VRB receiving, in February 2025, the first $10 million tranche of the $20.0 million receivable that it recorded in relation to its October 2024 sale of 51% of the shares in VRB China. Investing activities. Our investing activities generally relate to acquisitions of mineral property interests, purchases of public company shares in companies that we may partner with and capital expenditures at our projects. To date, due to our mining projects being in the exploration stage we have not incurred material capital expenditures. There were no significant investing activities during the three months ended March 31, 2025. Financing activities. During the three months ended March 31, 2025, we completed a public offering where we issued 11,794,872 units (the “Units”) at a price of $5.85 per Unit for net proceeds of approximately $65.6 million, after giving effect to the underwriter’s exercise in full of its option to purchase additional Units. Each Unit consists of (i) one share of our common stock and (ii) one accompanying warrant. Also during the three months ended March 31, 2025, our subsidiary, Cordoba received a $5.0 million bridge loan from JCHX. Contractual Obligations As of March 31, 2025, there have been no material changes, outside the ordinary course of business, in our contractual obligations since December 31, 2024. Refer to Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our 2024 Form 10-K for information regarding our contractual obligations. Off Balance Sheet Arrangements As of March 31, 2025, we were not involved in any off-balance sheet arrangements that have or are reasonably likely to have a material effect on our financial condition, results of operations, or liquidity. Related Party Transactions See Note 13 of our consolidated financial statements for the three months ended March 31, 2025. 21 Critical Accounting Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the disclosure of contingent assets and liabilities as of the date of our financial statements. Below are the accounting matters that we believe are critical to our financial statements due to the degree of uncertainty regarding the estimates or assumptions involved and the magnitude of the asset, liability, revenue, expense, gain or loss being reported. Actual results may vary from our estimates in amounts that may be material to the financial statements. An accounting estimate is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our financial statements. We base our assumptions and estimates on historical experience and various other sources that we believe to be reasonable under the circumstances. Actual results may differ from the estimates we calculate due to changes in circumstances, global economics and politics and general business conditions. A summary of our significant accounting policies are detailed in Note 2 to our consolidated financial statements included in our 2024 Form 10-K. We have outlined below those policies identified as being critical to the understanding of our business and results of operations and that require the application of significant management judgment in developing estimates. Recoverable value of exploration mineral interests We review and evaluate exploration mineral interests for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability of our exploration mineral interests and intangible assets did not involve significant estimation in the periods presented as circumstances did not indicate the carrying amount of our assets may not be recoverable. However, the recoverability of our recorded mineral interests is subject to market factors that could significantly affect the recoverability of our assets, such as commodity prices, results of exploration activities that may affect our intentions to continue under option or earn-in agreements and geopolitical circumstances, particularly in Colombia. By nature, significant changes in these factors are reasonably possible to occur periodically, which could materially impact our financial statements. Stock-based compensation Compensation expense for PSU's granted to certain of our officers and employees is determined based on estimated fair values of the PSU's at the time of grant using a Monte Carlo valuation model, which requires the input of the following subjective assumptions: Grant date: March 6, 2025 Expected volatility 63.4 % Expected life of PSU's (in years) 2.75 USA risk-free interest rate 4.0 % Canada risk-free interest rate 2.6 % Expected dividend rate 0 % Weighted average grant-date fair value (per unit) $ 7.07 The expected volatility is based on the historical volatility of our stock on the NYSE American over a term commensurate with the expected life of the PSU's. The USA risk-free interest rate was based on the yield observed on the US Dollar treasury curve as at the grant date, while the Canadian risk-free interest rate was based on the yield observed on the Canadian dollar government bond curve as at the grant date. Income taxes We make estimates and judgments in determining the provision for income tax expense, deferred tax assets and liabilities and liabilities for unrecognized tax benefits, including interest and penalties. We are subject to income tax laws in many jurisdictions, including the United States, Colombia, Canada, Australia, the Ivory Coast and Peru. 22 We report income tax in accordance with U.S. GAAP, which requires the establishment of deferred tax accounts for all temporary differences between the financial reporting and tax bases of assets and liabilities, using currently enacted tax rates. In addition, deferred tax accounts must be adjusted to reflect new rates if enacted into law. Realization of deferred tax assets is contingent on the generation of future taxable income. As a result, we consider whether it is more likely than not that all or a portion of such assets will be realized during periods when they are available, and if not, we provide a valuation allowance for amounts not likely to be recognized. In determining our valuation allowance, we have not assumed future taxable income from sources other than the reversal of existing temporary differences. The extent to which a valuation allowance is warranted may vary as a result of changes in our estimates of future taxable income. In addition to the potential generation of future taxable income through the establishment of economic feasibility, development and operation of mines on our exploration assets, estimates of future taxable income could change in the event of disposal of assets, the identification of tax-planning strategies or changes in tax laws that would allow the benefits of future deductible temporary differences in certain entities or jurisdictions to be offset against future taxable temporary differences in other entities or jurisdictions. We recognize the effect of uncertain income tax positions if those positions are more likely than not of being sustained. The amount recognized is subject to estimates and our judgment with respect to the likely outcome of each uncertain tax position. The amount that is ultimately incurred for an individual uncertain tax position or for all uncertain tax positions in the aggregate could differ from the amount recognized. We had no uncertain tax positions as of March 31, 2025.